<DOC>
[109th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:29812.wais]
UNLOCKING AMERICA'S ENERGY RESOURCES: NEXT
GENERATION
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND AIR QUALITY
OF THE
COMMITTEE ON ENERGY AND
COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
MAY 18, 2006
Serial No. 109-101
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/house
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COMMITTEE ON ENERGY AND COMMERCE
JOE BARTON, Texas, Chairman
RALPH M. HALL, Texas JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida Ranking Member
Vice Chairman HENRY A. WAXMAN, California
FRED UPTON, Michigan EDWARD J. MARKEY,
CLIFF STEARNS, Florida Massachusetts
PAUL E. GILLMOR, Ohio RICK BOUCHER, Virginia
NATHAN DEAL, Georgia EDOLPHUS TOWNS, New York
ED WHITFIELD, Kentucky FRANK PALLONE, JR., New Jersey
CHARLIE NORWOOD, Georgia SHERROD BROWN, Ohio
BARBARA CUBIN, Wyoming BART GORDON, Tennessee
JOHN SHIMKUS, Illinois BOBBY L. RUSH, Illinois
HEATHER WILSON, New Mexico ANNA G. ESHOO, California
JOHN B. SHADEGG, Arizona BART STUPAK, Michigan
CHARLES W. "CHIP" PICKERING, Mississippi ELIOT L. ENGEL, New York
Vice Chairman ALBERT R. WYNN, Maryland
VITO FOSSELLA, New York GENE GREEN, Texas
ROY BLUNT, Missouri TED STRICKLAND, Ohio
STEVE BUYER, Indiana DIANA DEGETTE, Colorado
GEORGE RADANOVICH, California LOIS CAPPS, California
CHARLES F. BASS, New Hampshire MIKE DOYLE, Pennsylvania
JOSEPH R. PITTS, Pennsylvania TOM ALLEN, Maine
MARY BONO, California JIM DAVIS, Florida
GREG WALDEN, Oregon JAN SCHAKOWSKY, Illinois
LEE TERRY, Nebraska HILDA L. SOLIS, California
MIKE FERGUSON, New Jersey CHARLES A. GONZALEZ, Texas
MIKE ROGERS, Michigan JAY INSLEE, Washington
C.L. "BUTCH" OTTER, Idaho TAMMY BALDWIN, Wisconsin
SUE MYRICK, North Carolina MIKE ROSS, Arkansas
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee
BUD ALBRIGHT, Staff Director
DAVID CAVICKE, General Counsel
REID P. F. STUNTZ, Minority Staff Director and Chief Counsel
SUBCOMMITTEE ON ENERGY AND AIR QUALITY
RALPH M. HALL, Texas, Chairman
MICHAEL BILIRAKIS, Florida RICK BOUCHER, Virginia
ED WHITFIELD, Kentucky Ranking Member
CHARLIE NORWOOD, Georgia MIKE ROSS, Arkansas
BARBARA CUBIN, Wyoming HENRY A. WAXMAN, California
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
HEATHER WILSON, New Mexico ELIOT L. ENGEL, New York
JOHN B. SHADEGG, Arizona ALBERT R. WYNN, Maryland
CHARLES W. "CHIP" PICKERING, Mississippi GENE GREEN, Texas
VITO FOSSELLA, New York TED STRICKLAND, Ohio
GEORGE RADANOVICH, California LOIS CAPPS, California
MARY BONO, California MIKE DOYLE, Pennsylvania
GREG WALDEN, Oregon TOM ALLEN, Maine
MIKE ROGERS, Michigan JIM DAVIS, Florida
C.L. "BUTCH" OTTER, Idaho HILDA L. SOLIS, California
JOHN SULLIVAN, Oklahoma CHARLES A. GONZALEZ, Texas
TIM MURPHY, Pennsylvania JOHN D. DINGELL, Michigan
MICHAEL C. BURGESS, Texas (EX OFFICIO)
JOE BARTON, Texas
(EX OFFICIO)
CONTENTS
Page
Testimony of:
Arvizu, Dr. Dan E., Director, National Renewable Energy Laboratory 14
Yoder, Marvin, Manager, City of Galena, AK 21
Novak, John, Executive Director, Federal and Industry Activities,
Environment and Generation Sectors, Electric Power Research
Sectors 46
Abate, Victor R., Vice President, Renewable Energy, GE Energy 87
Hammond, Dr. Troy D., Vice President, Products, Plextronics, Inc. 93
Linebarger, Tom, Executive Vice President and President, Power
Generation Business, Cummins, Inc. 99
Katzer, Dr. James, Visiting Scholar, Laboratory for Energy
and the Environment, Massachusetts Institute of Technology 107
Cresci, Joseph E., Chairman, Environmental Power Corporation 115
UNLOCKING AMERICA'S ENERGY RESOURCES: NEXT
GENERATION
THURSDAY, MAY 18, 2006
HOUSE OF REPRESENTATIVES,
COMMITTEE ON ENERGY AND COMMERCE,
SUBCOMMITTEE ON ENERGY AND AIR QUALITY,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:09 a.m., in
Room 2322 of the Rayburn House Office Building, Hon. Ralph
Hall (Chairman) presiding.
Members present: Representatives Shimkus, Wilson, Bono,
Otter, Murphy, Burgess, Barton (ex officio), Boucher, Green,
Capps, and Hall.
Also present: Representative Bass.
Staff present: Kurt Bilas, Counsel; Annie Caputo, Professional
Staff Member; David McCarthy, Chief Counsel for Energy and
Environment; Sue Sheridan, Minority Senior Counsel; Bruce
Harris, Minority Professional Staff Member; and Peter Kielty,
Legislative Clerk.
MR. HALL. I would like to welcome all of our witnesses here
today for our hearing, entitled "Unlocking America's Energy
Resources: Next Generation." Without objection, Mr. Boucher,
the Chair will proceed pursuant to Committee Rule 4E and
recognize Members for three minutes for opening statements. If
they defer, this time will be added to their opening round of
questions.
With electricity generation expected to grow about 50 percent
by 2030, the need for alternative sources of energy will continue to
grow. There are many innovative technologies currently being
developed that will become part of our generation portfolio and
take their place along side natural gas, coal, and nuclear. This
hearing will give us the opportunity to hear from two panels of
knowledgeable witnesses about the new technologies and what to
expect down the road. It is important that we encourage their
development now, in order to avoid future strains on the American
people and American manufacturers.
We have with us today representatives and experts from the
wind, solar, coal, and the biomass industries to discuss renewable
research being funded publicly and privately. So we also have
with us a representative from the city of Galena, Alaska, to talk
about their plans to build the first small nuclear power plant. I
would like to thank all of our witnesses for being here today and I
look forward to your testimony.
[The prepared statement of Hon. Ralph Hall follows:]
PREPARED STATEMENT OF THE HON. RALPH HALL, CHAIRMAN,
SUBCOMMITTEE ON ENERGY AND AIR QUALITY
I'd like to welcome all of our witnesses here today for our
hearing entitled, "Unlocking America's Energy Resources: Next
Generation". Without objection, the Chair will proceed pursuant
to Committee Rule 4(e) and recognize Members for 3 minutes for
opening statements. If they defer, this time will be added to their
opening round of questions.
With electricity generation expected to grow about 50% by
2030, the need for alternative sources of energy will continue to
grow. There are many innovative technologies currently being
developed that will become part of our generation portfolio and
take their place alongside natural gas, coal and nuclear. This
hearing will give us the opportunity to hear from two panels of
knowledgeable witnesses about these new technologies, and what
to expect down the road. It is important that we encourage their
development now in order to avoid future strains on the American
people and American manufacturers.
We have with us today representatives from the wind, solar,
coal and biomass industries as well as experts to discuss
renewables research being funded publicly and privately. We also
have with us a representative from the city of Galena, Alaska to
talk about their plans to build the first small nuclear power plant.
I'd like to thank our witnesses for being here, and I look
forward to their testimony.
MR. HALL. The Chair at this time recognizes Mr. Boucher, the
ranking member.
MR. BOUCHER. Thank you very much, Mr. Chairman. I want
to commend you for convening today's hearing so that our
subcommittee can learn about cutting-edge technologies for
electricity generation. A number of technologies are now under
development that will assist in achieving our national goal of a
balanced electricity generation portfolio and ensure that our
Nation's growing need for electricity is met in a constructive way.
I am particularly interested in hearing from our witnesses on their
assessment of the progress in developing renewable technologies
such as wind, solar, and biomass. Commentary on advances that
are currently underway in nuclear technology and prospects for its
expanding use will also be welcome.
I am particularly interested in technological developments with
regard to electricity generation from coal, our most abundant
domestic energy resource, with supplies adequate for 250 years.
Given its domestic availability, it is appropriate that coal constitute
a major and growing component of our electricity generation fuel
mix. New technologies, including integrated gasification
combined cycle, ultra supercritical pulverized coal combustion,
and emerging technologies to capture the carbon dioxide emissions
from coal-fired power plants, all hold great promise for the ability
to continue to use coal in growing tonnages with very minimal, and
in some cases, zero emissions. And testimony from our witnesses
this morning about their view of the role of coal in our fuel mix for
the years ahead, would also be very welcome.
Mr. Chairman, I appreciate your convening this hearing. I
think it is certainly timely and I join with you in looking forward to
the testimony of our witnesses.
MR. HALL. Thank you, Mr. Boucher. Mr. Shimkus of Illinois
is recognized for an opening statement.
MR. SHIMKUS. Thank you, Mr. Chairman. And there are two
hearings going on simultaneously, this one and a
telecommunications subcommittee meeting, so if we are running
back and forth, those of us who share those responsibilities, excuse
us. I think those today are showing they have a great interest in
electricity generation and all of the players in having a competitive
open-field market. I, like my friend and colleague, Mr. Boucher,
have been singing the praises and return of coal. And in discussion
with just average citizens, they think we are just shoveling it out of
the coal mine and sticking it into a burner and burning that coal
and creating all of this nasty stuff, whereas, because of regulations
and rules and new technologies, it is a whole new world.
I am excited about Peabody's investment in Illinois and the
Prairie State Energy Campus, which uses a new wet electrostatic
precipitator. That is actually going to start removing some
mercury issues from there. It is, by definition, one of the cleanest
coal-generating power plants on the board. We hope to break
ground this fall, our first quarter. And the frustrating thing is, in
the environmental comparisons that they have to fight against, the
environmental comparisons have plants that are on the board that
aren't up and running, that project all of these better environmental
advantages that we will never see come true because these plants
are not going to be built. So I just find that an interesting dilemma,
when you are trying to move with new technology, proven
technology, then you have to fight this environment of, well, it is
not perfect, and trying to reach the perfection is the enemy of the
good, many times, and these are great, great benefits. They are
coming from all different environments. We are going to hear
about nuclear power in a smaller package that I am excited about,
and also the benefits. I know the President has talked about using
solar power and the ability to have the shingles assist in a home
and the like, so I think this is very timely, because economics 101
is supply and demand. You have to increase supply and you have
to address the demand equation and you have to do all of them.
You know, just cutting demand is not going to address price and
concerns. You have to increase supply and you have to address
demand and competitive choices out there with the standard.
So this is a very, very important hearing and we are very
excited about it. Mr. Chairman, thank you for this time and I yield
back.
MR. HALL. Thank you. The Chair recognizes the gentlelady,
Ms. Capps, for an opening statement.
MS. CAPPS. Thank you, Mr. Chairman. I also am glad that we
are holding this hearing this morning. I welcome our witnesses
and I believe that putting more attention on the potential of
renewable fuels and alternative energy is something that many
people have been waiting for, advocating for, for many years.
Increased use of renewables and alternative energy would clearly
reduce our dependence on fossil fuels. And since this country is
not exactly awash in oil and natural gas, reducing our dependence
on them would be good, not only for our environment, but also for
our national security.
To be honest, however, we have to do more than talk about the
potential that renewables and alternative energy have for this
country. Talking is something we have been doing for a very long
time, but we have to put into place more funding for programs to
bring these energy sources to market, and we have to make
changes in our energy policy to encourage their use.
Unfortunately, the budget that we just voted upon last night and
that the President had submitted earlier this year, I believe
shortchanges our Federal investment in this area. The overall
energy efficiency and renewable energy part of the budget would
actually go down if this President's budget then actually becomes
enacted in Appropriations. In fact, under President Bush's
proposal, I don't even think we are even spending what we spent in
the last years of the Clinton Administration.
I would bring to the committee's attention a 2004 CRS report
that projects the percentage of national energy demand supplied by
renewables in the year 2030 would only be about 6.7 percent. It
was 6 percent in the year 2004, so that isn't showing very much
progress. We should be doing much, much more if we are really
serious about making progress in this area.
I would also note that this committee missed historic
opportunities, time and time again, during the repeated
consideration of so-called comprehensive energy legislation to
embrace renewable energy. Mr. Pallone's amendment to establish
a renewable portfolio standard was repeatedly rejected by the
Majority party in this committee, and we weren't even allowed to
have a vote on it on the House floor. Adoption of that amendment
would have required that our major utilities slowly increase the
percentage of energy they derive from renewable sources, like
solar, geothermal, wind, and biomass. At least 13 States have
similar requirements in place, so we know this can be done without
disrupting electricity production or raising prices. So while I am
pleased that the subcommittee is looking at this issue, again, it is
very disappointing that we seem to be starting over at ground zero.
Finally, I find it ironic that mere months ago, we passed
legislation that was touted by its supporters as providing
comprehensive strategy to deal with our Nation's energy
challenges; and yet, here we are talking about the need for more
renewables and alternative energy. Last week the Majority
discovered that maybe making our cars more fuel efficient would
be a good thing. I feel sort of vindicated in the arguments that
many of my colleagues on this side and I have been making over
the years in support of renewables, alternative energy, and
increased efficiency standards. I only wish that our proposals had
carried the day then so that Americans today could be benefiting
from them. But that being said, there is no time like the present to
get started and I thank you for giving us that opportunity today. I
yield back.
MR. HALL. Thank you, Ms. Capps. The Chair recognizes the
gentleman from Texas, Dr. Burgess, for an opening statement.
MR. BURGESS. Thank you, Mr. Chairman. I too want to thank
you for holding today's hearing. In my district in north Texas, we
run the gamut of renewable energy. There is a company that
manufactures solar panels in Keller, Texas, and another
manufactures wind turbines in Gainesville. I encourage anybody
who is in the wind turbine business not to buy those cheap
Brazilian blades. Those Gainesville blades will hold up a lot
longer and do you really well.
The Lake Dallas Independent School District uses geothermal
energy to heat and cool its schools. The Wal-Mart in McKinney,
Texas, which is just outside my district, is one of their two new
energy efficient stores that uses renewable technologies such as
solar panels and roof wind turbines in the parking lot, to generate
electricity for their store. And in Denton, Texas, under the
leadership of Mayor Euline Brock, they have constructed the
world's first renewable biodiesel facility. The facility is powered
by the methane gas extracted from the adjacent landfill and has the
capacity to produce approximately three million gallons of pure
biodiesel per year. The City of Denton's use of biodiesel fuel mix
is expected to reduce emissions by 12 tons per year in the county.
That is significant because we are under some clean air mandates.
The opening of this facility demonstrates the City of Denton's
dedication to cleaning up the air that we breathe. This is especially
important in the north Texas region because of the clean air
mandates we exist under.
Well, Mr. Chairman, that is why the hearing is so important
today. Our economy is growing in north Texas and of course our
demand for energy is, as well. As we try to satisfy this demand in
an environmentally friendly way, affordable renewable fuel
sources will take on an even greater importance than they do
already. Of course, I want to thank the witnesses that are
appearing here before me. Since I haven't used all of my time, let
me just address the renewable portfolio standard, because, in
Texas, approximately 50 percent of our electricity is generated by
natural gas and another 38 percent by coal; but Texas has one of
the most aggressive renewable portfolio standards in the country.
Texas RPS was increased by the State legislature in 1999,
requiring that Texas use a total of nearly 3,000 megawatts of
renewable energy by the year 2009. But in August of 2005,
Governor Perry signed a bill which increased that requirement to
almost 6,000 megawatts by 2009. The RPS mandate in Texas is a
phased-in approach that offers flexibility through a renewable
energy credits training program. Any company that does not
satisfy their requirements by directly owning or purchasing
renewables, may purchase credits to satisfy that requirement.
Thank you, Mr. Chairman. I will yield back the balance of my
time.
[The prepared statement of Hon. Michael Burgess follows:]
PREPARED STATEMENT OF THE HON. MICHAEL BURGESS, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
Mr. Chairman,
Thank you for convening today's hearing.
In my district, we run the gamut of renewable energy - there's
a company that manufactures solar panels in Keller and another
that manufactures wind turbines in Gainesville.
The Lake Dallas Independent School District uses geothermal
energy to heat and cool their schools. The Wal-Mart in McKinney,
which is near both my district and Chairman Barton's, is one of
two of their new "energy efficient" stores and uses renewable
technologies such as solar panels on the roof and wind turbines in
the parking lot to generate electricity for the store.
And in Denton, under the leadership of Mayor Euline Brock,
they have constructed the world's first renewable biodiesel facility.
The facility is powered by the methane extracted from the adjacent
City of Denton Landfill and has the capacity to produce
approximately three million gallons of pure biodiesel per year.
The City of Denton's use of a biodiesel fuel mix is expected to
reduce emissions by twelve tons per year. The opening of this
facility opening demonstrates the City of Denton's dedication to
cleaning up the air we breathe. This is especially important in the
North Texas region as we work to comply with Clean Air Act
requirements.
That is why this hearing is so important today. As our
economy grows, so too does our demand for energy. As we try to
satisfy this demand in a environmentally-friendly way, affordable
renewable fuel sources will take on an even greater importance
than they do already.
I'd like to thank the witnesses for appearing before us today; I
am looking forward to hearing your testimony.
MR. HALL. Thank you. And I note the presence of the
Chairman of the Energy and Commerce Committee, and being of
sound mind, I recognize him at this time for as much time as he
consumes.
CHAIRMAN BARTON. Thank you, Chairman Hall, for taking a
little bit of the load off the full committee in holding this hearing
today on R&D and the new technologies to provide electricity and
natural gas for America's future. I want to thank our witnesses for
appearing before us today. We value your input. Your discussion
of new energy technologies is of particular interest to me, since I
began my career as an engineer.
One way America will be able to secure its energy future is
through technology. Our panelists today are on the cutting edge of
the effort to bring new technologies to market. Their work is
helping to secure America's energy future. There is another
important component to the work that you are doing today. Much
of it is with technologies that have a minimal environmental
impact. Clean, safe domestic sources of energy are important to
develop. Newer technologies such as wind, solar, biomass, and
other renewables will help put the United States on the track for a
clean energy-secure future. We must not forget, however, the
more traditional sources of power. Clean coal, second and third-
generation nuclear power, and distributed generation must all make
important contributions to our energy future.
Last year the Congress passed the Energy Policy Act of 2005.
I am very proud of that bill. It provides incentives for both
traditional and new sources of electric power generation. Through
the research at our national laboratories, public/private
partnerships, and private research, the United States is moving
ahead on developing new sources of energy. There is another
benefit to developing these new sources of electricity, in addition
to the economic and environmental benefits. It incrementally takes
the price and demand pressure off of other fossil fuels, like natural
gas, that are needed for other uses, like chemicals and fertilizer.
These exciting new technologies will help America conserve its
nonrenewable resources.
Of course, developing new technology is not the only thing we
can and must do to secure our future. We must unlock our
domestic energy resources by exploring for energy in the vast
tracts that today are off limits. We must also conserve without
punishing American consumers. Our auto efficiency reform bill is
a major step towards that end, as are the many conservation and
energy efficiency provisions in the Energy Policy Act of 2005. I
think we should also adopt more common sense rules and
processes that will enable us to move energy to consumers faster
without compromising our environmental standards. One example
of that effort is the refinery reform permitting bill that passed this
committee, or came out of this committee and is expected to be on
the floor of the House again in the very near future.
This hearing is important because it allows Congress to see the
important research being done in this country on energy sources
and shows us that the best is yet to come. Thank you again, Mr.
Chairman, for holding the hearing, and I want to thank our
witnesses for being here today. I yield back.
[The prepared statement of Hon. Joe Barton follows:]
PREPARED STATEMENT OF THE HON. JOE BARTON, CHAIRMAN,
COMMITTEE ON ENERGY AND COMMERCE
Thank you, Chairman Hall, for holding this hearing today on
research and development into new technologies to provide
electricity and natural gas for America's future. I also want to
welcome and thank our excellent panelists for joining us today. We
value your input. Your discussion of new energy technologies is
of particular interest to me since I began my career as an engineer.
One way America will be able to secure its energy future is
through new technology. Our panelists today are on the cutting
edge of that work to bring new technologies to market. Their work
is helping to secure America's energy future. And energy security
means jobs and a better standard of living for all Americans.
There's another important component to the work you are
doing - much of it is with technologies that will have a minimal
environmental impact. Clean, safe domestic sources of energy are
important to develop. Newer technologies such as wind, solar,
biomass and other renewables will help put the United States on
track for a clean, energy-secure future. However, we must not
forget more traditional sources of power, too - clean coal, nuclear
and distributed generation must all make important contributions to
our energy future.
Last year, Congress passed the Energy Policy Act of 2005. I
am very proud of that bill. It provided incentives for both
traditional and new sources of electric power generation. Through
research at national labs, public-private partnerships and private
research, the United States is moving ahead on developing new
sources of energy.
There is one other benefit to developing these new sources of
electricity, in addition to the economic and environmental benefits
- it incrementally takes the price and demand pressure off of other
fossil fuels like natural gas that are needed for other uses like
chemicals and fertilizer. These exciting new technologies will help
America conserve its non-renewable resources.
Of course, developing new technology is not the only thing we
can and must do to secure America's energy security. We must
unlock our domestic energy resources by exploring for energy in
the vast tracts that today are off-limits. We must conserve without
punishing American consumers. Our auto fuel efficiency reform
bill is a major step toward that end, as are the many conservation
and efficiency provisions in the Energy Policy Act of 2005.
We must also adopt more common sense rules and processes
that will enable us to move energy to consumers faster without
compromising our environmental standards. One example of our
efforts here is the refinery permitting reform bill that the House
will pass very soon.
This hearing is important because it allows Congress to see the
important research being done in this country on energy sources
and shows us that the best is yet to come. I look forward to what
the panelists have to say.
MR. HALL. I thank the Chairman and note the presence of Mr.
Bass, the gentleman from New Hampshire. We will ask
unanimous consent that he be allowed to attend and to participate
if he chooses. Is there objection? The Chair hears none. The
Chair recognizes Mr. Otter, the gentleman from Idaho.
MR. OTTER. I may object. I want to know what he is going to
say.
MR. HALL. Well, I was with him until one o'clock this
morning and I think he said it all then. All right, I will recognize
you, Governor Otter.
MR. OTTER. I am going to pass.
MR. HALL. We will go to Mr. Green, the gentleman from
Texas, for an opening statement.
MR. GREEN. Thank you, Mr. Chairman. Obviously, I arrived
right on time. I would like to put my statement into the record, but
I appreciate the--
MR. HALL. Without objection.
MR. GREEN. I appreciate you calling the hearing and I would
just like to put a statement into the record. In a time of high oil
prices, we know we need to be able to diversify, and my biggest
concern, Mr. Chairman, and I am glad for this hearing, is that--and
I only wanted to look to the future in alternatives, but I also wanted
to get through the next 20 or 25 years, so that is why we need to
look at hydrocarbons, at least for the short term, until we can get to
some other alternatives. So I will put my full statement into the
record. Thank you.
[The prepared statement of Hon. Gene Green follows:]
PREPARED STATEMENT OF THE HON. GENE GREEN, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
Mr. Chairman and Ranking Member, thank you for holding
this hearing.
I support diversifying our energy portfolio in any way
possible-more efficient natural gas, solar power, clean coal,
nuclear power, wind power, and other renewable sources of
energy.
We need to avoid picking favorites, because the economy is
likely to have a much bigger impact than anything the government
can do.
The only good thing to come out of higher oil prices is an
increased incentive to use alternative sources of energy for
transportation.
While natural gas prices also sky-high relative to their
historical prices, perhaps we will have a similar incentive to
produce new alternative electricity technologies as well, such as
solar power.
Coal power will continue to offer affordable and reliable power
in places that are willing to site new coal facilities, like Texas, but
other areas without coal generation are going to have to pay higher
prices.
Natural gas used to be the preferred form of new power, since
it burns cleanly, but as the Department of Energy has noted, the
high prices of natural gas are leading people to rethink those
planned investments.
We need natural gas in the petrochemical business, where it is
irreplaceable. If short-term high natural gas prices lead to more
coal, nuclear, and alternative energy hopefully natural gas prices
come down.
Of course if we really want to improve our natural gas price
situation and protect the hundreds of thousands of American
manufacturing jobs at stake, we should support the language in the
Interior bill which repeals the Congressional moratoria for natural
gas drilling in the OCS.
Thank you and I yield back.
MR. HALL. All right, I thank the gentleman. The Chair
recognizes the gentlelady from New Mexico, Mrs. Wilson.
MRS. WILSON. Thank you, Mr. Chairman. I also wanted to
thank you for having this hearing today to learn a little bit more
about what some of the future might look like as we expand our
electricity generation and as the demand increases. We know that
by 2030, we are going to have a 50 percent increase in demand
over current levels. We are going to have to figure out how to
supply that demand.
In New Mexico, we do some innovative things. The third
largest wind generation project in the world went on line on
October 1, 2003, out in eastern New Mexico. And in eastern New
Mexico and the high plains of eastern New Mexico, we laugh at
this time of year and say that in New Mexico, at this time of year,
Arizona is on its way through to Texas and it is all being carried in
the wind. It comes one particle at a time in the dust. But they have
got 136 turbines there, standing 210 feet high and generating 200
megawatts of power. That is about enough power for 94,000 New
Mexico homes. And of course Sandia National Laboratories in
Albuquerque, New Mexico, develops energy technologies, solar
energy, and new more-efficient solar technologies are emerging
from those laboratories and into companies, like Advent Solar, that
are making solar, highly efficient solar cells for the commercial
market and manufacturing them in Albuquerque. They are also
looking at a biomass plant in the east mountains of New Mexico
and the east mountains of Albuquerque. That is not only going to
help restore the watershed, but take the waste from that restoration,
use it for electricity generation in a cogeneration facility, and the
heat from the generators will be used to warm a greenhouse that
employs 70 people full time, where it is otherwise not
economically viable.
So there are a lot of important things happening in new ways
with renewable energy resources, and we are really looking
forward to looking at this generation of technologies to see where
America is going to take us. Thank you, Mr. Chairman.
MR. HALL. Does the gentlelady yield back?
MRS. WILSON. Yes, sir, I do.
MR. HALL. The Chair recognizes Mrs. Bono, the gentlelady
from California.
MS. BONO. Thank you, Mr. Chairman. I will submit my
statement for the record.
[The prepared statement of Hon. Mary Bono follows:]
PREPARED STATEMENT OF THE HON. MARY BONO, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Chairman:
I am very pleased you are holding this hearing today. Too
often, Congress is so consumed with the here and now that we
don't take time to look towards the future. This hearing lets us talk
about the future.
While government has a role to play in this debate, it is my
belief that the private sector, as well as our colleges and
universities, can and must play a critical role in bringing forth new
and innovative technologies.
Too often, states and local communities are dependent on only
a few sources of energy. As we see in California, when the cost of
natural gas rises, so too do our cooling bills. In the California
desert, the sweltering summer months must be met with plentiful
and affordable cooling. It is not a luxury but rather a necessity. So
in order not be wedded to a single large source of generation, I
believe that we can and should look to diversify. But our efforts
should not stop there - we need to look at a diverse portfolio that
includes alternative sources of clean and efficient energy.
All of us have read about various forms of renewable sources
of energy. Many of these sources, like solar, wind and geothermal,
are not new to us. In fact, these sources of energy are thriving in
California's 45th Congressional District. But the technologies
associated with these forms of generation are changing and they
are changing for the better. The government's goal should be to
encourage honing and improving upon these technologies.
There are also lesser known sources of renewable energy that
are a bit more cutting edge. Here, our goal should be to foster the
growth of promising new resources and then find a way to
incorporate those into the market.
It is my hope that this hearing will shed light on both well
known and lesser known forms of energy that can and should be
part of our nation's future. I want to know how Congress can play
a positive role in partnering with others to help create new forms of
energy that are clean and affordable.
Thank you and I yield back my time.
MR. HALL. All right. Mr. Bass, do you care to make an
opening statement?
MR. BASS. Mr. Chairman, I appreciate the courtesy. I will
pass.
MR. HALL. All right, we will get underway with the testimony.
Dr. Arvizu and Mr. Yoder. Did I say it right? Close?
MR. ARVIZU. Yes, sir.
MR. HALL. For government work, it is pretty good.
MR. ARVIZU. Not bad at all.
MR. HALL. We want to thank you two gentlemen and the
others that comprise the second. Don't judge our respect for you
and our appreciation for you being here by the empty chairs here,
because this is hopefully the last day we are going to be in session.
People have about three or four other committees to go to and have
a lot of other things going on. Your testimony will be heard by
these people in the back row, and they will tell those of us on the
front row what you said. So it is very important that you give your
testimony so that they hear. It will be taken down by a very
capable gentleman over here at the end of the table. It goes into
the record for all the Members of the Congress to see. So it is not
just talking to empty chairs. But thank you for that.
Doctor, I recognize you at this time to sum up, if you can, in 4
or 5 minutes, or whatever you take. We are not going to gavel you
down, but be as brief as you can. That gives us time to ask
questions. Thank you, sir.
STATEMENTS OF DAN E. ARVIZU, DIRECTOR, NATIONAL RENEWABLE ENERGY LABORATORY;
AND MARVIN YODER, MANAGER, CITY OF GALENA, ALASKA, ACCOMPANIED BY PHILIP
MOOR, DIRECTOR, PROJECT DEVELOPMENT, BURNS & ROE ENTERPRISES, INC.
MR. ARVIZU. Thank you, Mr. Chairman and members of the
committee. It is indeed a big honor for me to be here. I appreciate
the opportunity to talk and provide commentary to this topic of
great importance, and I do submit my full written statement for the
record and trust that that will be accepted in its entirety, and I will
summarize that testimony in my opening remarks.
Mr. Chairman, I am the Director of the National Renewable
Energy Laboratory, the Department of Energy's primary lab for
research and development of renewable energy and energy
efficiency technology. Let me begin by noting that it was the first
energy crisis in 1970 that, while I was an engineering student in
graduate school, that motivated me to pursue a career in renewable
energy and I started with the Sandia National Laboratory to do just
that. The Nation's attention at that time was on energy similar to
what it is today. The good news is the Nation did respond with an
R&D program that over the years has produced many benefits in
terms of alternative energy. I will get to those here in a moment.
Perhaps the more sobering news is that we have learned in the past
three decades that the magnitude of the energy challenge is much
greater and more complex than we imagined, and the consequences
of inaction are quite significant. Our Nation needs to produce
considerable amounts of new energy to serve our citizens and to
keep our economy going. At the same time, we need to reduce our
dependence on oil and continue to import--I am sorry--continue to
protect our environment, and it is clear to me that significant
sustained national energy research, development and deployment
programs are essential across all of our energy options, including
clean fossil fuel, sustainable nuclear power, and energy efficiency
and renewable energy.
The history of the National Renewable Energy Laboratory,
which I head, has demonstrated that focused research can yield
valuable new technologies in the near term, with many collective
benefits. Consider, for example, that over the past 25 years the
cost of wind has declined from over 40 cents a kilowatt hour to
now in the range of 4 to 6 cents a kilowatt hour in good wind sites.
The cost of electricity from photovoltaics has been reduced by 80
percent over that same time and today it is in the utility scale at 15
to 30 cents a kilowatt hour. And it is because of the progressively
lower costs in both wind and photovoltaics and other technologies
that these two have become the fastest growing sources of new
electricity in the United States and in the world today, and there
are similar gains in other technologies as well.
President Bush underscored the need for continuing energy
research when he visited our laboratory earlier this year. The
President's Advanced Energy Initiative calls for a 22 percent
increase in clean energy research at the Department of Energy, and
his initiative would expand research in renewable fuels as well as
solar electricity, and we believe this is a really important new
development. The renewable energy industry is real. Tens of
billions of dollars worldwide are presently part of that industry. It
is rapidly growing and the market growth is spurred by a
combination of technology advances and public policies. Further
development of new renewable energy technologies will create
many opportunities domestically. Renewable energy is plentiful
across every region of our Nation. Renewable energy technologies
can be an engine for local economic growth, job creation, and we
are beginning to see that in a number of States.
While we clearly need supply side solutions, it is also clear that
energy efficient solutions are often the most cost-effective way to
meet future demands. Energy efficiency should be an ingredient of
any comprehensive national program.
For non-hydro renewables such as wind, the technology is
beginning to mature. Ten gigawatts, 10,000 megawatts of wind
are installed in the United States, 60,000 in the world, and there is
still a need for continued research to eventually eliminate the
production tax credits that are required to make that market go in
the United States, and importantly, to make this clean energy
source more suited to lower wind regimes as well.
In solar photovoltaics, researchers at our national center are
part of the President's Solar America Initiative. They are working
to bring the cost down of photovoltaics to between 5 and 10 cents a
kilowatt hour in the next decade. To get there we have to develop
more cost-effective manufacturing techniques and advanced
engineered materials. We are seeing those in the laboratory today.
I am very excited to note that we have a couple of examples of
some of those technologies here on display. Our troops are using
solar battery chargers in the field in Iraq today, technology
developed at our national laboratory. Additionally, we have thin-
film photovoltaics on plastics that we fly in space presently, and
this technology will be ubiquitous in the future; technology is
advancing very rapidly.
On renewable fuels, we have great opportunity there. We
believe that with domestic resources, we can get to 30 percent of
our current U.S. gasoline consumption to be supplied by biofuels,
and we think that can be done in a very short period of time, as
well, with, certainly, competitively priced ethanol from cellulosic
biomass that the President has put in as his biofuels program.
Each of these areas I have highlighted suggest that there are
still challenges that remain and that we need to continue to get the
cost down for renewable energies and fuels in order to accelerate
their adoption. Renewable energy offers us a tremendous
opportunity, and from my vantage point, the prudence of making
serious national investments to achieve the full potential of energy
efficiency and renewable energy is very clear and very compelling.
Thank you.
[The prepared statement of Dan E. Arvizu follows:]
PREPARED STATEMENT OF DR. DAN E. ARVIZU, DIRECTOR,
NATIONAL RENEWABLE ENERGY LABORATORY
Mr. Chairman, thank you for this opportunity to discuss the
important role the next generation of energy resources and
technologies will play in meeting the critical energy needs of our
nation. I am the director of the National Renewable Energy
Laboratory, the Department of Energy's primary laboratory for
research and development of renewable energy and energy
efficiency technologies.
Our nation is at a critical juncture. We need to produce
considerable amounts of new energy to serve our citizens and keep
our economy growing. At the same time we need to reduce our
dependence on imported oil and continue to protect our
environment.
The fundamental question -- Where will this new energy come
from? - has no one answer. The reality is that if we are to solve
our energy problems, and meet the phenomenal growth in demand
for energy, we must have an energy portfolio that is at once, both
smart and diverse. In my view, it is not a matter of nuclear energy
versus solar energy, it's not wind power versus new fossil fuel
technologies. The answer is that each will have an important place
at the table - we will need all of these technologies, and more.
I cannot predict precisely what our energy landscape will look
like, say, in 25 years, as technology and markets evolve. But I can
say with some confidence that we do need a significant and
sustained national energy research program to get us there.
With a vital research and development program working on
behalf of our nation, I am optimistic that we will be able to supply
all the energy we need - and develop new industries that help grow
our economy, and further environmental progress - while doing
so. Throughout my career in energy research, I have seen time and
again just how much a well-directed and properly supported R&D
effort can accomplish.
One need look no further than the relatively brief history of our
research facility in Golden, Colo. Since our laboratory was
founded in 1977 (known then as the Solar Energy Research
Institute) the progress made on so many fronts has been nothing
short of remarkable. NREL, along with leading academic
institutions and corporations throughout the U.S., have
demonstrated that focused research can yield valuable new
technologies in the near-term, with many collective benefits for
society added over the longer term.
Consider that over the past 25 years, the cost of wind energy
has declined from 40 cents per kilowatt-hour to four to six cents a
kilowatt-hour today. The cost of electricity from photovoltaic
technologies has plummeted 80 percent over that same time. These
progressively lower costs have helped wind and solar energy
become two of the fastest growing sources of new electricity in the
U.S. and the world. Researchers at our laboratory attest to similar
gains in other energy technologies, ranging from solar thermal
power, biomass power, geothermal energy, hybrid vehicles and a
host of advanced energy efficient technologies for industry.
President Bush laid out a timely and compelling energy vision
when he came to our laboratory earlier this year. The President's
Advanced Energy Initiative calls for a 22 percent increase in clean
energy research at the Department of Energy. These proposals
emphasize research into renewable fuels, as well as renewable
solar and wind technologies.
Renewable energy can and should be one of the key players in
meeting future demand for electricity and transportation fuels. We
have hugely abundant renewable resources in the United States.
The solar resource is good in every state, and even Alaska has the
equivalent solar resource of Germany, which today is the largest
solar market in the world. There are enough wind resources -
concentrated in hilly areas of the country, coastal regions and the
Great Plains - to meet twice the country's total electricity
demand. There are major, untapped geothermal resources in the
West, and you can find vast amounts of useable biomass resources
in virtually every state.
Longer term, although hydrogen is often thought of primarily
as an automotive fuel, its role as an energy carrier will be
important in the electricity sector. Hydrogen can be produced from
water using any available source of electricity - fossil, nuclear or
renewable. This makes it possible to overcome the intermittency of
wind or solar resources by using them to produce and store
hydrogen, which can then be used to run a generator on demand.
The challenge that remains before us is to continue to bring
down the cost of renewable electricity and fuels in order to
accelerate their adoption. NREL and its industry and university
partners have made impressive progress in this area over the past
three decades but we still have a long way to go before each of the
renewable technologies realize their full potential and become truly
cost-competitive with traditional alternatives.
Our cost-reduction effort has a two-pronged strategy. One
course is to work diligently on short-term, applied R&D to bring
down the cost of existing processes and manufacturing methods.
The other is to continue with mid-term, disruptive technology
advancement, and long-term, higher-risk and revolutionary basic
research that industry can't afford on its own, to identify and
develop the next generation of renewable energy technologies.
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A new, 71,000-square-foot Science & Technology Facility at
NREL, to be completed this year, will allow us to do even more of
this "transformational" R&D in solar, basic science and hydrogen
research.
So exactly where are we today? And, moreover, what remains
to be done to ensure that we have the most economic, the most
secure and the most environmentally beneficial energy portfolio in
the future?
Surely, while we clearly need supply-side solutions, it is
equally clear that energy efficiency can be of significant value in
reducing the demand for power. The goal may be simple - to use
energy more intelligently, and not waste it. But achieving that
simple goal often requires the same kind of complex and
sophisticated concepts and technologies that we have come to
expect on the energy production side of the equation.
Energy efficient solutions are often the most cost effective way
to meet future demand and also provide additional non-energy
benefits, such as improved productivity, increased durability and
reduced air emissions.
Buildings account for 70% of the nation's electrical energy use.
DOE's current research goal is to develop cost effective, grid-
connected Zero Energy Homes by 2020. A net Zero Energy Home
produces as much energy as it consumes over the course of year.
A total of nearly 40,000 energy efficient homes have been
completed within the Building America program, and individual
research houses, including the Zero Energy Denver Habitat home,
are demonstrating the feasibility of reaching the Zero Energy
Home goals. Expanded investments in private and public research
partnerships like DOE's Building America Program, are
accelerating the adoption of new efficiency and renewable energy
technologies within the housing and commercial buildings
industries.
Energy efficiency technology also is having a tremendous
impact in the transportation sector. DOE's Clean Cities program
has encouraged use of alternative fuels, saving more than a billion
gallons of oil since its inception. Gasoline-electric hybrid vehicles
already are successfully boosting the fuel economy of our nation's
vehicle fleet, and plug-in hybrids offer the promise of cars that can
go 100 miles or more on a gallon of gas.
It is important that energy efficiency, in combination with
energy supply, be a key ingredient of any comprehensive program
for national energy research.
On the energy production side, some of the most dramatic cost
reductions have been achieved in solar power technology. In real
terms, electricity from photovoltaics - or PV, technologies that
produce electricity directly from sunlight - cost one fifth or less of
what they did 25 years ago. Concentrating solar power costs about
one seventh of what it did then. The price of power from grid-
connected PV systems today ranges from 15 to 32 cents a kilowatt
hour. This year industry will ship PV modules capable of
producing 1.2 gigawatts of power into the world marketplace.
There is currently 450 megawatts of installed capacity from
photovoltaics in the U.S.
Our researchers in the National Center for Photovoltaics at
NREL are working to bring that cost down to around 4 to 6 cents a
kilowatt hour by 2025. To get there, we will have to develop
better, faster and larger scale manufacturing techniques, and create
higher efficiency PV panels in the process. Solar technologies
have the potential to shift a large proportion of daytime peak loads
away from natural-gas-fired generators. And longer term, we
believe solar nano-structured materials now being explored at
NREL and elsewhere can revolutionize solar PV.
As for wind power, in the best wind regimes, wind-generated
electricity today costs about 4 to 6 cents/kWh - one-tenth of what
it did 25 years ago. Our engineers and industry partners at the
National Wind Technology Center are developing new methods to
drive that cost down to 3.6 cents a kilowatt hour at low wind-speed
sites onshore by 2012, and down to 5 cents a kilowatt hour for
shallow water offshore sites by 2014.
Wind energy is the most mature of the renewable technologies.
In some regions, wind power can be the cheapest source of
electricity. There currently are 10 gigawatts of wind power
installed in the United States, and 60 gigawatts worldwide. While
wind power is well established, and is growing at impressive rates,
there remains considerable need for new research that will further
drive down costs, and, importantly, make this clean, renewable
energy source better suited to areas that have lower average wind
speeds than the prime areas being developed thus far.
Our work today is focused on developing efficient, low wind-
speed turbines, advanced power electronics and transferring wind
technology to off-shore systems. If we continue to develop more
advanced methods of accurately forecasting and integrating wind
into the broader electrical generation system, wind energy has the
potential to contribute up to 20 percent of the nation's electricity.
There is 10,400 megawatts of biopower generation in the U.S.
Biopower today costs 8 to 12 cents a kilowatt hour, half of what it
cost 25 years ago. Scientists at NREL's National Bioenergy
Center and other labs are hard at work to lower that figure to 6 to 7
cents a kWh by 2020.
Geothermal resources contribute 2,400 megawatts to the
nation's power needs. Electricity from geothermal resources costs
5 to 8 cents a kilowatt hour today - about one-third of the cost 25
years ago. With the technology improvements we see over the next
two decades, geothermal power is projected to drop to less than 4
cents a kilowatt hour by 2025.
As for ethanol and other fuels made from biomass, there have
been significant improvements as well. Whereas the cost of
producing ethanol was more than $4 a gallon 25 years ago, it can
be made for $1.20 a gallon today. Our nation currently produces
about 4 billion gallons of ethanol annually, primarily from corn
grain. However, corn comprises but a small fraction of biomass
that can be used to make ethanol. A DOE and USDA study
suggests that, with aggressive technology developments, biofuels
could supply some 60 billion gallons per year - 30% of current
U.S. gasoline consumption - in an environmentally responsible
manner, and without affecting food production.
To gain greater use of "homegrown" renewable fuels, we will
need new technologies that will produce competitively priced
ethanol from cellulosic biomass, such as agricultural and forestry
residues, municipal wastes, trees and grasses. New technologies
like those we are now perfecting at NREL can break those
cellulosic materials down into sugars and ferment them into fuel.
The President has set a goal of making cellulosic ethanol cost-
competitive with corn-based ethanol by 2012, and thereby
reducing future U.S. oil consumption.
Essential to the success of each of these emerging technologies
is the need to move from a predominantly centralized model of
power generation to one that includes flexible, resilient and
distributed energy systems. This will require a concerted effort to
revamp our electricity infrastructure. By putting in place a more
modern and flexible electric distribution system, we will be able to
take full advantage of each new electric generation technology, and
do so in a way that maximizes their benefits in differing states and
regions across the country.
Most renewable power systems are distributed in nature, and
thereby can enhance reliability of the electricity grid. Distributed
generation can additionally be used instead of transmission and
infrastructure expansion, and thus save money for utilities and
consumers. Calculating the financial value of these benefits from
renewables can be difficult. Renewable systems typically cost
more initially, but most have low or no fuel costs, which can go a
long way toward mitigating price volatility of more conventional
fuels such as natural gas. We have to be able to put a dollar value
on these benefits - and we're working on that at NREL.
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Leadership provided by DOE, EPA, and national laboratories
has helped state agencies encourage the use of renewable energy to
help meet air quality goals. Maryland, Texas and New Jersey are
incorporating energy efficiency and renewable technologies into
their State Implementation Plan (SIP) planning process. In Texas
alone, 4 million megawatt-hours of energy efficiency measures
have resulted in more than 2,000 tons in NOx emission ozone
season reductions. Ozone season NOx reductions achieved
through energy efficiency and renewable energy measures in New
Jersey are predicted to improve air quality by almost 900
tons/season/year by 2012. Illinois is using air quality improvement
as a major driver in building 6 megawatt of new wind and
renewable capacity in the state.
Having served on the Secretary of Energy's Coal Council for
six years, and having been involved with nuclear issues throughout
much of my career, I appreciate the challenges in each of these
technology areas. Now, as director of NREL, I can tell you that
the pathway to reaching the full potential of energy efficiency and
renewable energy is clear and compelling.
Renewable energy and energy efficiency technologies can meet
our nation's growing energy demand, largely without pollution or
other trade offs. These technologies, however, can only achieve
their ultimate potential through a significant and sustained national
effort, focused on technology research, development and
deployment.
Thank you.
MR. HALL. Thank you very much. The chair at this time
recognizes Mr. Marvin Yoder, Manager of the City of Galena,
Alaska, and I hope we will hear from him something about your
city's efforts and discussion to plan to install a small nuclear unit
for electricity, a generator to replace your diesel generators. We
are very interested in that and would like to hear something of that.
I recognize you to summarize it at this time, and then we will go
into questions with you later.
MR. YODER. Thank you, Mr. Chairman, and subcommittee
members, for the opportunity to testify here today. On the board
here, you do see the layout of the plant and some of the
components that go into it. The purpose of my testimony is to,
one, review with you the urgent needs of Galena, Alaska, and other
remote Alaska communities; two, emphasize that Galena's first
concern is to develop a safe energy source for our citizens that is
clean and cost effective; and three, describe for you the 4S small
nuclear power plant design, which we believe satisfies our safety
concerns and is ready for NRC review and licensing.
Galena is a small town of 700 people on the Yukon River.
Sixty percent are Alaska natives. There are no roads to Galena, so
travel is primarily by air or on the Yukon River in the summer.
These transportation constraints increase the cost of goods and
services. Milk is $10 per gallon, and gas is $4.20 per gallon.
Another expensive commodity is electricity. The city operates a
diesel generator electric plant and annually receives 700,000
gallons of fuel by barge. Since 2000, the cost of fuel has increased
by more than 250 percent. Fuel is more than 70 percent of our
generation cost, and electricity has risen to 33 cents per kilowatt
hour--to three times the national average. The city is losing its
largest customer, the U.S. Air Force base through the Base
Realignment and Closure process. The Air Force purchased
approximately 55 percent of our power. When BRAC is
implemented, if we don't have any reuse plans, we are going to
lose that load. We currently operate a boarding school for 100
high school students and offer post-secondary training as well.
Low-cost electricity and heat are vital to the success of any Galena
reuse plan.
Because of all of these challenges, the city has been searching
for an alternative to diesel power for 10 years. We have
considered coal, and for the ones who consider that, there is a coal
bed about 10 miles from the city. We have considered methane
gas, solar, wind, and in-stream hydro. In 2003 we heard of the 4S
nuclear plant that is buried underground; it is safe and small and
will last for 30 years. Built in modules, it will lower the cost of
electricity by two-thirds, and it can generate excess power to serve
nearby villages. In 2003, the Toshiba Corporation, along with
others, traveled to Galena to discuss the 4S, and my observation is
that Toshiba was pleased with the prospect of working with the
community and the community present, though the 4S nuclear
reactor held some promise to meet our needs.
In 2004, we worked with the Department of Energy and
completed a study entitled "Galena Electrical Power: A Situational
Analysis." The study compared electric rates and the
environmental impacts of various electric options. The 4S was
determined to be superior to other options on both counts. The
report noted that this technology would reduce the greenhouse
gases of our diesel generators and also mitigate the likelihood of
diesel fuel barge spill on the Yukon River. For the first couple of
years we pursued this goal we seemed to be swimming against the
current. In the past few months the current seems to have reversed.
We are encouraged by several events. First, in November,
Mohammed Elbaradel, Director General of the International
Atomic Energy Agency, suggested there could be hundreds of 4S-
like reactors providing clean electric power and desalinated water
in locations around the world. Secondly, we were encouraged
when President Bush included small power reactors as integral part
of his GNEP initiative. Third, we were given seed money from the
Governor of the State of Alaska and the State legislature to begin a
white paper process for eventual submittal to the NRC.
The 4S is a liquid metal reactor, and it is very similar to the
EBR reactor that was successfully run at the Idaho National Lab
for decades as an electric generator. The 4S reactor and the power
generation equipment are designed to produce 10 megawatts of
electricity. The facility is quite small, taking up only half an acre.
The 4S reactor is designed to be fueled once, producing heat and
electricity for 30 years. The citizens of Galena and I want to have
a safe and secure power source. As mentioned in my opening
comments, facility safety is absolutely our first priority, and the 4S
plant meets or exceeds our expectations in this regard. In fact,
tests were run on the EBR-2 that proves that the reactor would
safely shut down without the need for active safety systems or
human intervention. The plant is inherently safe in its passive
design. I want to emphasize that the 4S is a technology that is
ready to deploy today. Galena has evaluated the alternatives and
we conclude that the 4S small power facility is the right choice for
our energy and environmental needs.
Toshiba and other Japanese companies have developed the 4S
design to the point where it is ready for NRC licensing. Other
Alaska towns are closely following Galena's 4S program because
of skyrocketing costs threatening their way of life. Mining
interests in Alaska and Canada have also contacted us of their
interest in the potential low-cost, nonpolluting energy source that
would allow mining and processing of gold and other metals, oil-
bearing sands and shale. Our Alaska Senators and congressmen
view the 4S project as being the first of several projects having the
potential to lower the cost to remote parts of Alaska and the lower
48, while improving the environment.
And we are looking for funding to carry this technology
through the NRC licensing process. Ultimately, we want a design
certification and license to construct and operate a 4S plant in
Galena. We have visited the Department of Energy to request
funding and appeal to this committee to help us meet our goals.
Our immediate needs are for funds to prepare the environmental
work, which will cost $20 million over 2 years, and we have
requested the GNEP provide $2.8 million of that to begin
immediate air, water, and ground data collection necessary for
environmental analysis. A 4S small power plant is a source of
energy that is ready to be built today. We are a small community
with a big idea, and we ask for your help in deploying this new
energy source.
Thank you, Mr. Chairman, for this opportunity to testify today.
I request that Galena's entire written testimony be included in the
hearing record. In attendance with me is our nuclear engineer, Mr.
Philip Moor of Burns and Roe Engineering, and we would happy
to answer your questions.
[The prepared statement of Marvin Yoder follows:]
PREPARED STATEMENT OF MARVIN YODER, MANAGER, CITY OF
GALENA, AK
GALENA'S NEED: Safe, clean, reliable, economic, and
environmentally compatible energy to replace current diesel-
fired electrical production
o Technology came from the Department of Energy's EBR-2
reactor at the Idaho National Lab (INL)
o Not new technology - adaptation of technology that is
decades old
o Passively safe (operator can shut off all power and walk
away)
o Provides electricity (10 megawatts), heat and hydrogen for
several thousand people
SOLUTION: Small Nuclear Power Plant
o 30 year reliable energy production without refueling
o Safe, secure underground facility requiring no periodic
maintenance
o Simple, passive safety systems
o Produces electricity, heat and hydrogen
o Near-term availability - 2010 to 2012 operation
GALENA'S ROLE: Galena an ideal site for first Small
Nuclear Power Plant
o First reactor must be in United States to get U.S. NRC
license
o Progressive, educated community - representative of rural
Alaska
o Economic growth limited by energy availability/costs
o 4S is cost competitive in Alaska:
? 4S costs $60 - $100/MWh (fully amortized)
? Alaska diesel cost: $290/MWh
? Lower 48 costs: Coal - $33 to $41/MWh +$15 to
$75 for carbon Permits
Gas - $35 to $45/MWh +$10 to $50
for carbon permits
Large Nuclear - $32 to $50/MWh
o Transforming technology - hydrogen center of excellence
o Citizenry involved and willing to undertake a project
o Initiated Nuclear Regulatory Commission discussions
FEDERAL FUNDING REQUEST: Nuclear Regulatory
Commission review
? FY07: $2.8 million - Regulatory analyses ("white papers");
Early Site Permit ("ESP"), and Combined Operating and
Construction License (COL) preparations.
? FY08: $10.0 million to initiate ESP/COL.
? FY09: $7.2 million to complete ESP/COL.
Overview:
Mr. Chairman and Members of the Subcommittee my name is
Marvin Yoder. I am the City Manager for the City of Galena,
Alaska. I want to thank you for the opportunity to testify today.
The purpose of my testimony is to (1) review with you the
urgent energy needs of Galena, Alaska and other remote Alaska
communities, (2) to emphasize that Galena's first concern is to
develop a safe energy source for our citizens, that is clean and
cost-effective, and (3) describe for you the 4S small nuclear power
plant design which we believe satisfies our safety concerns and is
ready for Nuclear Regulatory Commission (NRC) review and
licensing.
Galena, Alaska:
Galena is a small community of 700 people, 60% Alaska
Native, living on the banks of the Yukon River. There are no
roads to Galena so travel is primarily by air.
Because of our small size it may be difficult to conceptualize
the fact that Galena is a "hub community". There are four smaller
villages in our region that are partially dependent on Galena for
transportation and health care.
Freight is moved by air in the winter because the river is frozen
over; however, the river is open from June through mid-
September, and we do get barge service from Fairbanks in the
summer. These transportation constraints increase the cost of
goods and services. For instance milk is $10 per gallon and gas is
$4.20 per gallon.
Another expensive commodity is electricity. The City operates
the power plant which produces power from diesel generators.
The power plant annually receives approximately 700,000 gallons
of fuel from barges on the river. There is storage for enough fuel
to operate all winter.
As everyone knows the cost of fuel is rising dramatically.
Since 2000 the cost of fuel has increased by more than 250
percent. Fuel is more than 70 percent of our generation cost, and
electricity has risen to 33 cents per kilowatt hour.
Impact of BRAC and follow-on plans:
The effect of this has been exacerbated by the fact that the City
is losing our largest customer, the U.S. Air Force base, to the Base
Realignment and Closure (BRAC) process. The Air Force
purchases approximately 55% of our power. When BRAC 2005 is
fully implemented the city will lose that load unless a reuse for
those facilities is found. Our aim is to utilize the facilities on the
Air Force property by developing commercial businesses, and to
expand our educational and trade school program. Galena
currently operates a boarding school for 100 high school students
and also offers post secondary training. Low cost electricity and
heat are vital to the success of any Galena reuse plan.
Because of all these challenges the City has been searching for
an alternative to diesel power for 10 years. We have considered
coal, methane gas, solar, wind and in-stream hydroelectric.
Galena's situation is preferable to some of the other Alaskan
remote villages where the cost of utilities is even higher. There is
now concern that some of these native villages will be forced to
close their doors if alternatives to high energy prices are not found.
4S Small Nuclear Power Plant:
In the summer of 2003 we heard of a "4S" (super-safe, small,
simple) nuclear power plant that is buried under ground, is safe,
small, will last for 30 years, is built in modules, and will lower the
cost of electricity by two-thirds. Furthermore, it will generate
excess power beyond the City's needs that could provide
additional power to nearby villages.
In August of 2003 the Toshiba Corporation along with others
traveled to Galena to discuss 4S and look at our community.
Several members of the City Council attended that meeting.
My observation is that Toshiba was pleased with the prospect
of working with the community, and the community members
present thought the 4S nuclear reactor held some promise to meet
our power needs.
Alternative energy sources studied:
In 2004 we worked with the U.S. Department of Energy to
complete a study entitled Galena Electric Power - a Situational
Analysis. That study compared the electric rate and the
environmental impacts of various electric power options. The 4S
was determined to be superior to the other alternatives on both
counts. It was noted in the report that this technology would
reduce the greenhouse gases of our diesel generators, and also
mitigate the likelihood of a barge spill of diesel fuel on the Yukon
River.
Based on the results of that study, the Galena City Council, in
December of 2004, passed a resolution to continue our efforts to
determine if the 4S plant was suitable for Galena. In February of
2005 the City met with the NRC to inform them of our intentions
to further evaluate the feasibility of installing a 4S plant in Galena.
GNEP:
For the first two years that we pursued this goal we seemed to
be swimming against the current. In past few months the current
seems to have reversed and we are encouraged by several events.
First, in November of last year Mohammed Elbaradei, Director
General of the International Atomic Energy Agency (IAEA), in a
speech at MIT, suggested that there could be hundreds of small
reactors with designs like the 4S providing electrical power and
clean desalinated water in locations around the world. (It should
be noted that the 4S is well suited for hydrogen production as
well.)
Second, we were further encouraged when President Bush
included small power reactors as an integral part of his Global
Nuclear Energy Partnership (GNEP) initiative. GNEP contains
elements that endorse small reactors with a long fuel cycle that are
proliferation resistant.
Third, we were given seed money from the Governor of Alaska
and State Legislature to begin the "White Paper" process for
eventual submittal to the NRC.
And finally, in the past year there have been numerous articles
published addressing the role that nuclear power may play in
reducing greenhouse gases, stabilizing the cost of energy, and
reducing world demand for fossil fuels. While most of the
emphasis is on large nuclear facilities we are convinced that small
nuclear power plants will also play a significant role world-wide.
4S power plant specifics:
The 4S is a Liquid Metal Reactor (LMR) and is very similar to
the EBR-2 reactor which was successfully run at the Idaho
National Lab for decades as an electric generator. The 4S reactor
and the power generation equipment are designed to produce 10
megawatts of electricity. The facility is quite small taking up only
about one-half acre of land.
The 4S reactor is designed to be fueled once, producing heat
and electricity for 30 years. In this design all the nuclear heat
producing equipment is below grade, and contained within
separate underground structures. This design prevents access
without specialized lifting equipment. There is no spent fuel
storage on site. Because of its small size and simple design the
facility can be air cooled during normal operation. The design also
uses air cooling for the nuclear equipment after it is shutdown.
Galena's focus on safety:
The citizens of Galena and I want to have a safe and secure
power source. As mentioned in my opening comments, facility
safety is absolutely our first priority, and the 4S plant meets or
exceeds our expectations in this regard. In fact, tests were run on
EBR-2 that proves that the reactor would safely shutdown without
the need for active safety systems or human intervention. The 4S
plant is inherently safe in its passive design. I want to emphasize
that 4S is a technology that is ready to deploy today. Galena has
evaluated all the alternatives and we conclude that a 4S small
nuclear power facility is the right choice for our energy and
environmental needs.
Nuclear Regulatory Commission review:
Toshiba and other Japanese companies have developed the 4S
design to the point where it is ready for NRC licensing. Work is
being finalized now to prepare the NRC application documents.
Galena has met with the NRC to understand what needs to be
done to permit a plant like this in the United States. Our aim is to
have the 4S facility operational by 2012. We expect to pursue with
the NRC an Early Site Permit (ESP) and a Combined Operating
and Construction License (COL) process for the Galena project.
We think the permitting will take between 3 and 4 years. We will
meet with the NRC again in a few weeks to continue the dialogue.
With funding from Governor Murkowski and the Alaska State
Legislature, the City was able to contract with Burns and Roe, Inc
to prepare a series of White Papers. (These technical papers will
provide further education regarding the safety of the 4S plant.)
Other Alaska towns are closely following Galena's 4S program
because skyrocketing energy costs are threatening their way of life.
Mining interests in Alaska and in Canada have also contacted us.
They are very interested in the potential of a low cost, non-
polluting energy source that would allow mining and processing of
gold, other metals, oil bearing sands and shale.
City leaders have met with our Alaska Senators and
Congressman and have their support for this project. They view
Galena's 4S project as being the first of several projects having the
potential to bring lower cost energy to remote parts of Alaska and
the lower 48 states while improving the environment.
Funding and Design Certification:
We are looking for funding to carry this technology through
the NRC licensing process. Ultimately we want a design
certification, and a license to construct and operate the 4S plant in
Galena. We have visited with the Department of Energy (DOE) to
request funding, and appeal to this Committee to help us meet our
goals. Our immediate needs are for funds to prepare the
environmental work which will cost $20 million over 2 years. We
have requested the GNEP program provide $2.8 million of that
amount to begin immediate air, water and ground data collection
necessary for the environmental analysis. We see the GNEP
program as a logical source for funding this program and
encourage your support of Galena's efforts to build this 4S small
nuclear power plant.
Conclusion:
The 4S small nuclear power plant is a "today" energy source
that is ready to be built. We are a small community with a big idea
that wants to build it. I ask for your help in deploying this new
energy source. We are enthusiastic about the opportunity to
change the cost of living dynamic, and preserve our Native
Alaskan way of life in our little corner of the world.
Thank you, Mr. Chairman, for this opportunity to testify today.
I request that Galena's entire written testimony be included in the
hearing record. In attendance with me is our nuclear engineer,
Philip Moor, of Burns and Roe Engineering. We would be happy
to answer your questions.
MR. HALL. We thank you very much. I note the presence of
the Chairman of Energy and Commerce. Mr. Chairman, would
you like to propound any questions to the witnesses?
CHAIRMAN BARTON. Well, Mr. Chairman, I have been in
discussions with Mr. Boucher on the refinery permitting bill, so my
mind is not focused on new ideas on how to generate electricity. If
you will give me about 5 minutes to get focused, then I would
probably come up with some questions.
MR. HALL. All right.
CHAIRMAN BARTON. But at this point in time, I would like to
defer for five minutes.
MR. HALL. All right. Then I will ask a question of Dr. Arvizu.
Did I say that right that time?
MR. ARVIZU. It's Arvizu.
MR. HALL. Arvizu.
MR. ARVIZU. Yes, sir.
MR. HALL. And that is not what I said?
MR. ARVIZU. That is close.
MR. HALL. Remember, I am the Chairman.
MR. ARVIZU. Yes, sir, I will change it tomorrow.
MR. HALL. I thank you.
You mentioned hydrogen that was generated from wind power
and it's turbine. It is a method to overcome the fact that wind
power is intermittent. Is this cost competitive, and is anyone doing
this today?
MR. ARVIZU. Thank you for the question, Mr. Chairman.
Actually our local utility is the one that approached us about it.
They have several fairly major wind farms that they currently
operate and a couple more that they plan, and they are trying to
look to the future, because what they would like to be able to do is
capture that wind energy when there is no, perhaps, peak load
demand on the system so that they can use it at a later time. So
they are looking at hydrogen as an opportunity as a storage
medium. Perhaps it could be used for transportation fuel at some
time in the future, but that is their motivation. And so they have
entered a partnership with us at the National Laboratory and we are
looking at different components to make that cost-effective.
Today, I would offer that it is not cost-effective, but we believe
that it can be with additional development.
MR. HALL. In your opinion, which of the technologies that you
have described are ready for deployment now because they are cost
competitive and available, but are not being deployed to the extent
that they should be, and what do you think the reluctance may be
to deploy these technologies?
MR. ARVIZU. Well, certainly there are a number of factors that
offer what I would call barriers to more rapid, accelerated
deployment. Many of these technologies I mentioned in my
remarks are being deployed in various markets where the business
case can be made and the private sector can create a sustainable
business opportunity. So in the case of wind, the technology is far
enough along now when we have a good wind resource close to a
load. You don't have to add new transmission capabilities. You
can put wind into the system and essentially it is cost effective
today. Photovoltaics, when the solar resource matches your
demand peak, like in Southern California, where people turn on
their air conditioners in the afternoon, there is an opportunity there
to provide energy back into the system at a cost that is very
competitive with what we pay today. So there are ways to do that.
A lot of it has to do with some policies that are in place and also
some structural things that are part of the infrastructure we have
today.
MR. HALL. You state that there are 10,400 megawatts of
biopower. And so for the record, tell us what you mean by
biopower.
MR. ARVIZU. Well, there are two ways that you can use a
biomass or essentially a biomass resource for electricity
generation, and many of these are smaller power plants that use
some form of green waste, everything from yard clippings to some
of the municipal solid waste kinds of things as well, but much of
that biomass is also co-fired with coal to reduce the emission
profiles out of many of the power plants that are out there today.
So that is the technology that has been in place for some time now
and it is relatively mature.
MR. HALL. Mr. Yoder, tell us just briefly about your city's
plans to install a nuclear unit for electricity generation, the cost of
it, and how you are going to finance something like that. It seems
like it is a pretty big undertaking.
MR. YODER. It is a very large undertaking. We do realize that
since it is somewhat of a first of its kind, that there are a lot of
development costs that will not be there in the future ones, and
some of that is going to be borne by industry, by the manufacturer,
by whoever the eventual owner is. We will probably be a
purchaser of raw power and our determination will be based on the
cost of that power, not necessarily on the cost of the overall plant.
MR. HALL. What, if any, existing Federal or State rules are
hindering deployment of the technologies that you have discussed?
MR. YODER. The biggest hurdle I think we have to cross is the
Nuclear Regulatory Commission's rules. We expect that process,
the licensing process, to take several years. Galena, basically as a
city, is working on the environmental side of it. We expect the
manufacturer or, rather, industry, to do most of the licensing for
the plant itself. Our focus is on the environmental part of what
goes in Galena, and both of those have huge components at the
NRC that will take a considerable length of time.
MR. HALL. All right. My time has expired. The Chair
recognizes the gentleman from Virginia.
MR. BOUCHER. Well, Mr. Chairman, thank you very much
and, Mr. Arvizu--
MR. ARVIZU. Yes, sir?
MR. BOUCHER. --thank you for sharing your knowledge with
us this morning. I notice in your testimony that you are talking
about the potential for a zero energy home by the year 2020, and I
assume that means that the home would generate as much
electricity as it consumes, and so this is a home that can live totally
off the grid. Is that a fair description of what you have in mind?
MR. ARVIZU. It is. On an annual basis, the amount of energy
that it would generate would essentially be the same as the amount
of energy that it consumes on an annual basis, maybe not at the
same time. But we actually have a home in Denver that was part
of the Habitat for Humanity project and we helped design this
essentially net zero energy home. It has photovoltaic panels on the
roof, it has a very tight envelope so that there is very efficient use
of energy in the home, and we have a single mother with two boys
that are the occupants and their electricity bills are not zero, but
that is not because they are consuming energy. That is normally
some of the things that the utilities charge for services that they
otherwise use.
MR. BOUCHER. So the home is connected to the grid.
MR. ARVIZU. It is.
MR. BOUCHER. But it generates as much electricity as it brings
in, I suppose.
MR. ARVIZU. That is correct.
MR. BOUCHER. Is it selling excess electricity back into the
grid?
MR. ARVIZU. Precisely.
MR. BOUCHER. Yes. Well, let me ask you this. With regard to
a broader deployment of zero energy homes, would there be a role
for demand response in helping to make that possible? And I have
a particular interest in smart meter technology, and I am wondering
if you can enlighten us about, first of all, the role that demand
response would play in the creation of a large number of zero
energy homes, and the extent to which demand response
technologies, including smart metering technology, is being
deployed at the present time, and any barriers that you see to
further deployment of demand response technologies.
MR. ARVIZU. A very important question, sir. I think one of the
structural issues that will allow us to more rapidly deploy some of
these distributed resource technologies, such as the ones we are
talking about, is in fact both time-of-day pricing; and essentially
smart meters which are meters that can manage that commerce on
both sides of the meter so that we can begin to allow consumers to
make choices about how they use energy, based on its value. And
if you are at a point in the utility infrastructure where you are at or
near peak, the cost of supplying that energy is very expensive and
they pay a lot of money to do that. So as we are able to relieve that
load, it displaces new generation, it displaces maintenance and
operation costs, and at the same time gives the consumer the
opportunity to manage their own energy needs in a way that can
provide benefit to them and also to the economy and to the
environment.
MR. BOUCHER. So to what extent are smart meters being
deployed at the present time? Do you have a visibility for that?
MR. ARVIZU. Well, yes, it is a little frustrating because there
are not many places where we do have the entire, what I would
call, package of those types of incentives. California is the leader.
They, in fact, have been doing this for some time and I think other
States are beginning to get on board. There are other activities
going on in various forms of maturity across the country. We
don't have it in most States and in fact it is a fairly significant
barrier, even in our own State of Colorado.
MR. BOUCHER. Is that a regulatory issue at the State level, or
is it lack of will on the part of the incumbent utilities to deploy?
MR. ARVIZU. Well, I think it probably varies State by State.
There are a number of different ways in which those policies get
put in place, and without drawing a conclusion about whose
responsibility it is, I look at it from the perspective of what can the
technology offer, and then decisionmakers are in a position to
know that this kind of a policy will provide this kind of a benefit.
And to a large extent, we haven't had that level of transparency in
the past that I think now is beginning to become known to lots of
people, and all of sudden it becomes, I think, a very important and
healthy debate in many of the State legislatures.
MR. BOUCHER. We included in EPAct 2005 just for your
information, a provision that requires every State to undertake an
examination of the merits of demand response and smart meter
technology, and a potential requirement, State by State, that
electric utilities offer real demand, real-time pricing so that that
price signal would be sent and consumers would have a basis to
choose the time of day in which they consume electricity in greater
or lesser amounts. I suppose you haven't really looked around the
States to see what they are doing with that requirement, have you?
MR. ARVIZU. No, sir, I haven't. I can tell you this, I applaud
the language in the bill because it is absolutely what is necessary. I
think my observations are that many States are still trying to figure
how they do that and haven't yet come to a conclusion about what
needs to be done. But it is something that we ought to really move
on, I think.
MR. BOUCHER. Do you provide information to States on
request? Do you have a service that does that?
MR. ARVIZU. Yes, sir, we do.
MR. BOUCHER. So they can come to you for information?
MR. ARVIZU. They certainly can.
MR. BOUCHER. All right, thank you, Mr. Arvizu.
MR. ARVIZU. Thank you, sir.
MR. HALL. All right, the Chair recognizes Mr. Shimkus.
MR. SHIMKUS. Thank you, Mr. Chairman, it is great to be here.
I appreciate your testimony. Sorry, I had to run downstairs. That
is adjourned. That was a quick hearing and so I get to spend the
rest of the time up here. A couple questions that I would like to
address. And Dr.--
MR. ARVIZU. Arvizu.
MR. SHIMKUS. Arvizu. Do you talk anywhere about
geothermal? Do you consider that part of your portfolio?
MR. ARVIZU. We do. Geothermal is a mature technology. We
have roughly two gigawatts, 2,000 megawatts of geothermal
resource that has been tapped and generates electricity.
Geothermal is still a technology that is not only viable, but can
provide additional generation for our energy mix. In the grand
scheme of things, it is one of the technologies that we need to
pursue and use when the resources are available. The research that
is required to improve that technology allows incremental cost
reductions, perhaps doesn't have as much of an impact longer term
as some of the other technologies that are moving on a much more
rapid curve, but it is still a very important part of our portfolio.
MR. SHIMKUS. In my investigation, and especially in your
discussions about the home, really the geothermal applications, it
really is related to more home heating, but it then adds more to the
electricity cost, because you are really recirculating the geothermal
heating core. Through the use of more electricity, you can--with
natural gas concerns and escalating prices, those in the Midwest or
anywhere that relies on natural gas, there is a great benefit,
especially with the high price of home heating, but it does really
then address increase electricity use, which I am very interested in.
I have actually done a lot of research on the home heating front
and I think it holds great promise, also.
MR. ARVIZU. Yes. If I may respond, I think it is absolutely
essential, and I should make a distinction between a geothermal
resource, which is really things like tapping the geysers in
California, versus a ground-coupled geothermal pump, we call it,
which really takes advantage of that thermal gradient in the Earth
to the atmosphere, to essentially be a sink and a source for heat and
to reduce our heat load in our homes.
MR. SHIMKUS. Cooling load, too, in the summer.
MR. ARVIZU. So you can use that thermal gradient. You can
use the temperature difference, if you will, for providing benefit to
the inside of a dwelling.
MR. SHIMKUS. Right.
MR. ARVIZU. And that is what coupled thermal heat pumps are
and they are very--
MR. SHIMKUS. I am sorry. Let me get to Mr. Yoder real quick.
I am a big nuclear power proponent and I am very excited about
your proposal. A major question, though, is, what do you plan to
do with the waste? And if we don't open Yucca Mountain--we are
not going to build any more nuclear power plants in this country
unless we have a place to store the waste. Your plant is a smaller
size than most that we deal with, so what are you going to do with
your waste?
MR. YODER. I think that is a technical question. Mr. Moor is
here, and he could clearly answer that.
MR. SHIMKUS. Is the mic on?
MR. YODER. Oh, okay. Mr. Moor is here from Burns and Roe,
and he has done a white paper on decommissioning, and I would
like him to answer that question, if he would.
MR. MOOR. This is a very small facility, much smaller than
the commercial nuclear facilities that we are familiar with. It is 50
megawatts versus over a thousand. The way this facility is
designed, it has a 30-year core life, so it would be installed once,
and based on our current construction projection, the spent fuel
would be ready for repository in 2045.
MR. SHIMKUS. A repository. And where is that repository?
MR. MOOR. I am not here to respond to whether there will be a
Yucca Mountain or a recycling facility, but there will be some
Federal repository.
MR. SHIMKUS. That is what we hope.
MR. MOOR. That is what we hope, too.
MR. SHIMKUS. So that is an interesting debate. Senator
Domenici really did great harm in his comments yesterday. It is
critical that Yucca Mountain goes forward and it is critical that we
move the spent rods off these sites for our nuclear power plants so
that they can continue to use their plants to generate electricity, and
I would hope that you would use your connections with some
senior Members of the Senate to help address the advanced siting
with the Administration, or the licensing and then the expansion
and the move forward on Yucca Mountain. Mr. Chairman, my
time has expired and I yield back.
MR. HALL. I thank the gentleman. The Chair recognizes Mr.
Green, the gentleman from Texas.
MR. GREEN. Thank you, Mr. Chairman. I don't have many
questions and I will yield back the time. Mr. Yoder, you talked
about the base closure and your main customer now is the Air
Force base and you are going to develop that into other uses for
commercial and educational. I assume most of your diesel now is
barged in during the months when the river is not frozen.
MR. YODER. Yes, that is correct.
MR. GREEN. And I guess most of the equipment, because this
is a pretty ambitious project and I congratulate you on looking at it,
I guess that most of the equipment would be barged in to build the
facility.
MR. YODER. Yes. In fact, one of the early diagrams we had
from Toshiba showed the whole configuration sitting on a single
barge and coming in, in whole, so they had considered off-site
construction and bringing it in on a barge.
MR. GREEN. You know, that is interesting because I know of
an experience in Houston where we will do an expansion for a
chemical plant, for example, and all of the work will be done and it
will be towed up the Mississippi River and the Ohio River Valley
and literally dragged up the river bank and placed in one of the
chemical facilities there on the Ohio River. That is really good.
Dr. Arvizu?
MR. ARVIZU. Arvizu. Yes, sir.
MR. GREEN. I appreciate your testimony, especially on wind
power and I know, coming from Texas, obviously hydrocarbons
are important, but I know our State is doing some interesting things
off the coast, both Galveston, Brazoria County, in the Houston
area, but also just off the coast at South Padre, with windmills.
MR. ARVIZU. Yes.
MR. GREEN. And it is going to help the State's school
education fund and there will also be an alternative to put power
into the grid that we don't use anymore.
MR. ARVIZU. Right.
MR. GREEN. The biggest concern, though, is the
environmental side because of our flyways that we have in lots of
areas, and I don't know if that has been something the Department
of Energy has addressed, or is that something someone else would,
on expansion of wind power, because we already have wind power
in west Texas, with windmills.
MR. ARVIZU. Sure. Yes.
MR. GREEN. And has there been any evidence of a loss,
particular during migrations?
MR. ARVIZU. Yes. Well, it is first of all an issue that the
Department of Energy is very much focused on. We look at all the
environmental footprints that any of the renewable energy
technologies do represent. And certainly what we have learned in
30 years of wind technology development and deployment is that
you really do need to stay away from migratory bird flight paths,
because there is an issue that relates to disruption of some of those
avian issues. At the same time, I think a lot of these things tend to
get a lot more press than they are entitled in many respects. We do
need to manage those things and it is a matter of risk and reward,
the benefit that you get from these technologies versus whatever
risks they might represent. But in the case of things like the flight
paths for aircraft and even for the military, on the offshore
technologies and also the migratory bird paths, we are looking at
those very, very closely. There is a number of studies that we fund
through universities and other organizations to help us provide the
greatest amount of knowledge and information so that you site and
you permit these facilities in the places where they are going to
cause essentially the least disruption, and we believe that this is not
an insurmountable issue and in fact is one that we have, I think,
made a great deal of progress on and I think we got our arms
around that one.
MR. GREEN. Well, one of the perforations, I know that our
offshore drilling is at some of the best fishing in the Gulf of
Mexico, because typically it is just flat, and once you put a rig out
there and that is a place where the fish can go and find shade, but a
lot of sports fishing benefit from that. That is why the Ships to
Reefs, and even the Rigs to Reefs Program, is important, at least
for the western Gulf that we use--
MR. ARVIZU. Right.
MR. GREEN. --so if you put something in the water and it will
become a fish habitat, whether you intend to or not. So thank you,
Mr. Chairman.
MR. HALL. The Chair recognizes the gentlelady from
California, Mrs. Bono.
MS. BONO. Thank you, Mr. Chairman. My district, the 45th
District of California, is probably a district you are very familiar
with. We have got a lot of wind power, a lot of geothermal, not
enough solar. I think the Governor is doing a great effort in
expanding our solar capabilities, so I am very proud of my district.
And those of us in California think, with the extremely high cost,
the crisis that we faced, are on the cutting edge, as you mentioned
before, perhaps not by choice, but we were forced into it. But a lot
us are faced now with policies here in Washington and it seems
that if we could come up with a policy or something and focus our
energies on sort of a man-to-the-moon type of mission, we could
do a great deal. So in your written testimony you mention that our
Government needs a sustained energy research program. Can you
elaborate on that a little bit? Are you just supporting your current
efforts, or do we need to do a lot more and what should we be
doing and how far? Dr. Thomas Friedman, in this book, talks
about the next 10 years, getting completely off of any foreign
sources of oil. Can you talk a little bit more about this, please?
MR. ARVIZU. Yes, thank you. And thank you for the
opportunity to do that. Actually, Tom Friedman has been out to
the laboratory, he spent a day taping and he will have some sort of
documentary that will highlight a number of the technologies that
we are presently working on. The reason I talk about a sustained
effort and the reason that there is still additional opportunity for
new research and development is that the enormity of the problem
that we have got to face, and as someone mentioned earlier, the
projections that over the course of the next several decades, the
percentage of renewable energy won't increase. If you just project
a straight line, that is what the projections would indicate. My
very, very informed opinion is that we can do a lot better than that.
We can begin to think about 40, 50 percent of our new generation,
mid-century, being supplied by energy efficiency and renewable
energy technologies, and that is a bold statement. We need a lot of
energy. In order to do that, we need to continue to drive the cost
down and as I mentioned, the technologies that are in the
laboratory today will be the technologies that will supply those
markets.
I started in this business almost 30 years ago. The technologies
that we worked on in the laboratory 30 years ago are the
commercial products of today. And as I told the President when he
visited, it is important that we not take another 30 years to get the
technologies of today into the marketplace, and that is where I
think additional R&D on manufacturing processes, on deployment,
perhaps some policies to supplement that, to increase that
deployment opportunity and accelerate it, those are the kinds of
things that will lead us, I think, to that future that I know exists out
there, if we make a national commitment to make that happen.
MS. BONO. Well, I will gladly work with you and fully support
what you are trying to do. Yesterday, I and my staff were trying to
kick this around quite a bit and arbitrarily, I can't assign a figure,
that in 10 years we will be 100 percent off of foreign sources or
whatever it would be, and I would truly seek your assistance in
something like this. I actually was speaking with the President
about this as well, and had the opportunity to be with him and a
venture capitalist and to talk about the very issue, and this venture
capitalist was saying that they are moving out of the tech industry
now, into alternative fuels. Are you seeing that as well? And I
know that perhaps that's not your area of expertise as much, but is
the venture capitalist world going to be a big part of this role, the
private sector, or does the Government need to be the largest
player in this?
MR. ARVIZU. Well, I am fully convinced that the
Government's role is to try to mobilize that private sector capital
and that will certainly manifest itself early in venture funds and
venture technology kinds of investments. What we are seeing is a
rapid growth in clean energy investments and it is in fact growing
at a very significant rate. It is over a billion dollars now. There is
4 percent of the energy investments now going into clean
technologies and that is on a very rapid upswing. So all of the
indicators that are in the financial markets suggest to us that we are
at a tipping point, that we are going to have some things move
quickly and it is a matter of how quickly they will move,
depending on a variety of factors such as government policies and
technology development.
MS. BONO. I understand, too, a lot of folks in Silicon Valley
are very excited, very excited about this and I think are very
willing to push it along. The first question on that note--I get a lot
of calls and letters from constituents. This might seem like a silly
question, but I get it a lot and I would love for you to answer. Is
there really a project to convert water, not to extrapolate the
hydrogen, but water, somehow, into energy and there is a water-
burning engine out there that we are keeping from the people? I
get this a lot. I don't know if my colleagues do as well, but we do.
I hear it. It is when you are in California. That is northern
California.
MR. ARVIZU. Yes, let me not go into a dissertation about that.
We frequently get lots of people who are so enthusiastic, that they
would like to create what we call the perpetual motion machines,
and there are a number of those things. No. There is some really
great innovation and without speaking specifically to what
particular technology someone is talking about, I think it is worth
taking a look at some of these things. A number of them, the first
question we ask when we get asked a question like that, and
certainly feel free to provide those kinds of questions to us and we
will give you our opinions about things, but we look at, kind of, the
first law of thermodynamics to make sure that the science hangs
together and that is kind of the first step that we take. Frequently,
that is not the issue for deployment. The issue is, how do you get
the technology into the marketplace and the business planning that
goes with it? But does the science work? Does it hang together?
You know, we can give you an honest opinion about that, an
informed opinion. I don't know of any water-based energy
generators of any kind. It takes energy to convert materials to
other forms. So I don't know of any and we are not hiding
anything that I am aware of. So does that put your mind at ease a
bit?
MS. BONO. Thank you. And it will help for me to say that you
said that instead of just me. But also, is there a redundancy within
the Federal government or too many different areas? Is money
going out to too many different places and we should be basically
concentrating our efforts more? It sounds like with you.
MR. ARVIZU. Well, there is always a trade-off with how
focused do you get and where do you put your priorities. I think,
in the Department of Energy, that is one of the functions that they
perform, it is to assess for how much investment what benefit do
we get, and that needs to be a very thoughtful process and it needs
to be continually updated and evaluated. So I would say the
process is more important than the outcomes in this particular case,
because we do need to focus very precious taxpayer resource
dollars into these areas. There is lots of opportunity and there are
lots of things that we are not doing that we could do if we had
more money. But for the most part, I think the Department of
Energy does a pretty good job in prioritizing things.
MS. BONO. Thank you, that is good to know. I come from a
family, a very interesting family. I have a brother who is an
automotive engineer, another brother who is in the mom and pop
oil business, a mother who is a chemist and actually worked on the
Manhattan Project, and my father is a surgeon, so we kick this
around a lot and I would have to say they are pretty cynical about
renewables, and so I think I am the black sheep in the family with
this. But I will yield back, my time is up, but I do look forward to
working with you and I would love if you could come by and
coach me a little bit and give me some ideas.
MR. ARVIZU. I would be pleased to do that.
MS. BONO. Thank you.
MR. ARVIZU. And you are welcome to come to the laboratory.
MS. BONO. I actually will do that. Thank you very much.
MR. HALL. I thank the lady and recognize the gentleman from
Pennsylvania, Mr. Murphy.
MR. MURPHY. Thank you, Mr. Chairman, and I thank the
distinguished panel for being here. I have a couple of questions on
some of the aspects of renewable energy, because--and I read
through your testimony here, but it has to do with how we are on
the path of energy independence. First of all, some of the claims I
hear sometimes is, we really don't need to pursue drilling for more
oil or explore for more oil in the United States, because we can
take care of our energy problems with conservation and with the
renewable energy sources we have in America. Are we close to
doing that? Is there any truth to that at all?
MR. ARVIZU. Well, that is a loaded question to some degree.
Let me try to answer it as honestly as I know how. I don't believe
that we are at a point today where we can suggest that renewable
energy is our total solution, and energy efficiency. You know, 86
percent of the world energy consumption is based on a fossil fuel
of some sort. The projections are that that will continue for some
period of time. It would be, I think, presumptuous to say that we
can get off of that quickly. I think eventually, and we are talking
many, many years, that we can get the lion's share of our energy
from renewable resources. It will take a much longer and
protracted change in how we view energy infrastructure to get
there. So as a result, my short answer is I would like to think that
we can get a large fraction of our energy from renewable energy.
MR. MURPHY. Well, let me ask another thing, when it comes
to ethanol, because you do research on that. One of the criticisms
about ethanol we hear is that it takes more oil to make ethanol than
it really replaces. Is that true, not true?
MR. ARVIZU. The short answer, not true, and I can understand
why there is a debate about that. When you talk about corn
ethanol, what you are really talking about is the fermentation
process of the corn cobs, if you will, into ethanol. If you do the
energy balance on that, based on the best information we have, it is
about 1.4 units of energy out for every one unit of energy you put
in and that includes everything that it takes to grow the corn, to
fertilize, to do the production and all the things with it.
MR. MURPHY. Are we improving in the efficiency of that?
MR. ARVIZU. Well, the other point that I would like to say is
also that it is not the focus of the national program. The national
program is focused on cellulosic biomass, which is not the food
part of the plant. It is the corn stover. It is the balance of that
plant. It is ag waste of all other kinds. It is forest residues. And if
you do the energy balance on those, the energy balance is five or
six, or perhaps more, to one, five or six units of energy out for
every unit of energy put in. And that is where, you know, 90
percent of the biomass resource that we are talking about for our
liquid fuel consumption of the future is going to come from. So it
is a little bit of a red herring to talk about the energy balance on
ethanol, from essentially a sugars or a fermentation process.
MR. MURPHY. Another area, and we are going to hear a little
bit later on some of the solar issues, too, from Plextronics. But
with regard to the solar cells, you made reference to the prices
coming down dramatically on those. How about the--the price is
going to be coming down, but you still need so much space to have
enough of those solar panels to provide electricity. Are we
improving the efficiency of that as well?
MR. ARVIZU. Absolutely. The efficiency is, in fact, what is so
exciting to me. I started, again, in the business 20, 30 years ago
and we thought about a single material like silicon that we
typically think about for integrated circuits. Today's materials are
a whole new set of really exotic, engineered materials. We are
thinking about nanostructures today that get beyond the limitations
of these bulk materials. And in fact, we can begin to think about
efficiencies that are not in the 20 percent range, which is where
laboratory scales are, the 20 to 30 percent range, we can start to
think about efficiencies in the 50, 60, perhaps even more, percent
range and the technology and the physics that go along with that
being developed in the science programs, in the technology
development of the national laboratories and universities today.
MR. MURPHY. How far are we away from the 50 to 60 percent
range?
MR. ARVIZU. Well, I would offer that we will get there for
space-type applications, we will get there in the next--in fact, we
have got a DARPA project right now that we expect to have 50
percent scales in the next 5 years. Now those will be very
expensive and they will be used primarily for specialty
applications, but the learning we get from that and then taking
those and putting those into these nano-structured materials is
probably another decade away beyond that. But that is the
technology that will take us to mid-century, to this end point that I
was talking about earlier, where you get essentially a large fraction
of our energy mix from things like solar photovoltaics.
MR. MURPHY. I thank you very much and I yield back the
balance of my time, Mr. Chairman. Thank you.
MR. HALL. I thank the gentleman. I think the Ranking
Member has other questions he would like to ask at this time. I ask
unanimous consent to recognize him, though. He has used his time
and we do not have anyone here to give time or to yield to him. Is
there objection? The Chair hears none. The Chair recognizes Mr.
Boucher. All right. Mr. Otter, the Chair recognizes you. I
withdraw the recognition of Mr. Boucher.
MR. OTTER. Mr. Chairman, I will yield to Mr. Boucher.
MR. HALL. All right, let us get underway now.
MR. BOUCHER. All right, thank you, Mr. Chairman. I just
have one brief follow-up question and it was actually stimulated by
Mr. Murphy's question to you about the difference between corn
as a feedstock for ethanol and cellulosic materials as a feedstock.
MR. ARVIZU. Yes.
MR. BOUCHER. Let me confess an absence of a lot of
knowledge about this, which will become readily apparent as I
propound the question. I had been told that one of the key
differences that leads to a favorable energy balance versus what
some would argue is a negative energy balance with regard to corn,
and a more favorable balance on the cellulosic side, was the fact
that, with regard to corn, you have to cultivate the crop every year,
and that requires a substantial amount of energy input; whereas,
with some of the cellulosic materials, perhaps all of them, they are
more or less like perennials, they regenerate naturally. You don't
have to expend energy every year in order to replant the crop. Is
that a key differentiating factor between the two, or is it more--and
if it is not that, then what it is? Why is it that you get a 1.4 to one
yield with regard to corn, and a five to one yield with regard to
cellulosic material? Just explain the factors that differentiate those,
if you would.
MR. ARVIZU. Well, you have been coached properly. That is a
good explanation of the primary difference. The resource in
cellulosic biomass really comes from two sources. One is ag
residue and it is not just corn stover or the leftovers in the crops.
Typically, those things are plowed back under and so they are
essentially a waste product. You need to save about 20 percent of
that to re-nutrient the soil and to get the consistency back to where
it needs to be. But across the agricultural landscape, you have got
a number of different crops and they are essentially field waste.
The residue is part of that biomass resource. The other biomass
resource is what we might call energy crops. So when you are
talking about things like switch grass and a variety of other things
that you might, on a periodic basis, seed and grow, because they do
grow naturally, that is really the other aspect of that. Those two
sources combined make this broader resource that I was talking
about earlier that could potentially serve 30 percent of our, you
know, equivalent gasoline consumption.
MR. BOUCHER. Do you have any obvious candidates for the
kind of feedstock materials on the cellulosic side that would be the
most sensible for the United States to target as opportunities?
MR. ARVIZU. Well, the beauty is that there is really no one
single crop that is best at this point. In fact, part of the research is
to figure out how do you make ethanol very efficiently from
various kinds of crops, and the beauty of that also is that those
resources are distributed according to the microclimates across the
country, and we really don't have to do a lot, other than to take
advantage of the things that are already in place, forest thinnings
and a variety of other things. That would be very valuable, I think,
in terms of an ecosystem management.
MR. BOUCHER. Okay. Well, thank you very much.
MR. HALL. The Chair recognizes the very generous Mr. Otter
for the remaining time.
MR. OTTER. Thank you, Mr. Chairman. Mr. Arvizu, am I
saying that right?
MR. ARVIZU. Yes, you are.
MR. OTTER. Okay. Mr. Arvizu, mine is Otter, O-t-t-e-r. Mr.
Arvizu, you made a statement in your opening statement that made
me curious. When you said in a very short period of time, we can
be independent, what is your short period of time?
MR. ARVIZU. Maybe you can help me with where in my
statement. It was, in a very short period time, I believe we can get
the costs of these technologies down to where they can provide a
great impact into the marketplace. A lot of it has to do with those
market forces and the business cases that have to be made and the
investment that has to be made. When I say a short period of time,
I am really talking about in the next 5 to 10 years.
MR. OTTER. Okay.
MR. ARVIZU. And so we don't have to wait decades. It can be
done--
MR. OTTER. And a lot of these technologies we are already
working on, in fact, we have implemented some, haven't we?
MR. ARVIZU. Absolutely.
MR. OTTER. And we are maybe in the first generation of some
of those technologies and--
MR. ARVIZU. Well stated, yes, sir.
MR. OTTER. I want to aid you a little bit in your answer to Mr.
Boucher about ethanol.
MR. ARVIZU. Yes.
MR. OTTER. In 1984, prior to coming to Congress, I worked
for a potato company, oddly enough, in Idaho and we used to
supply--my company used to supply all the potatoes to the
McDonald's restaurants. And so once we endure the lawsuits for
obesity, we will be able to go forward, I suppose. But one of the
things we did in 1984 was, we found out that we had a biofuel and
it was called potato peelings, and so we built about three and a half
to four million gallon ethanol plants at the pipeline of the waste
stream coming out, which normally we fed to cattle. But we built
an ethanol plant on the end of each of those pipelines coming out
of those processing plants. And so subsequently, we produced six
to eight million gallons a year of ethanol out of what had been a
waste stream and we did it economically. Getting through all of
the permitting processes and everything was a marathon. Once we
finally got to where we needed to go, we were very successful. I
am wondering if you think some incentive by the Government
would aid some of these waste streams that are coming out of the
processing plants. All the food that we have today, we process
about 80 percent of the potatoes now that are grown in Idaho. I am
wondering if there is any kind of an idea or a scheme that you
might have in mind. Maybe scheme is the wrong word, in these
days of earmarks. But are there other sources of ethanol besides
the switch grass and besides corn, which seems to be the most
favorable? I am familiar with Brazil's ability to turn a few
switches in a sugar plant--
MR. ARVIZU. Absolutely.
MR. OTTER. --and go from making granulated sugar, or some
other kind of product, to ethanol, which has made them
independent. Have you looked at that side of it?
MR. ARVIZU. Well, we looked at a variety of things and so
many of these things are structural. You know, when you have a
waste stream and you are trying to figure out what to do with it, it
always makes sense to let us figure out if we can convert that into a
benefit or a revenue stream in some way, and many times that
works well. There are structural issues where sometimes you do
that and you displace somebody else's market for feedstock for
animals or whatever, and all of a sudden, now there are regulatory
barriers to making those things economical. So a lot of what
Brazil has done and others have done is start with a clean sheet of
paper and you design in kind of what your outcomes need to be. A
biorefinery where you can dial the switch from a food product to
an energy product makes great sense for them. If we could do that,
unfetter ourselves from the regulatory equilibrium that we are in
now for all the various objectives that we have, we make this
process a lot more efficient and move much more quickly. Now
that is very complex and very complicated to do, and so my job is
to provide the decision makers, and people like yourself who are in
a position to try to formulate those policies, with what can the
technology do, because I believe the technology opportunities are
much greater than we are allowing them to contribute in terms of
the overall energy mix, but it requires a policy framework that is
consistent with the objectives. And so that is a very, very difficult
thing to do, but I am bullish that there is an opportunity there.
MR. OTTER. I see. And one other question that I wanted to
refer to is, making a product is just about half of the business to
business. It is distributing it and getting it to market.
MR. ARVIZU. Right.
MR. OTTER. Because we already have some inherent problems
with ethanol on early blending, like in pipelines.
MR. ARVIZU. Yes, yes.
MR. OTTER. Are we still working on technology to figure out
how we can get that blend as quick as possible and still be able to
wheel our energy through these pipelines? That is one part of my
question. The other part of my question is the end distribution.
We have had E-85 in this country now for quite some time, and
throughout the United States there are only 400 pumps. There are
only 400 places to get go it, yet we are encouraging the automobile
industry to develop cars that can burn E-85. Now, we had that
initial problem in the early 1980s to mid-1980s with ethanol. For
those of us that were not using MTBE and we chose to use ethanol,
we didn't know that we were doing the right thing, because we
didn't know what was going to happen, like in last year's energy
bill, where we took MTBE out of the equation for environmental
reasons, which was a smart and an appropriate thing to do. So
getting that distribution is important. Getting it to the marketplace
so that the consumer can use it is important.
MR. ARVIZU. Yes.
MR. OTTER. I don't think we can study just the technology.
We also have to study the matrix of transportation and marketing.
MR. ARVIZU. Yes.
MR. OTTER. Are you working on that as well?
MR. ARVIZU. Yes, sir, we pride ourselves in being what I call
market relevant. We need to know what market problem are we
solving and how does the technology play into that. Many times it
is exactly what you said, it is the infrastructure and the distribution.
So you start trying to look at how can I do that locally rather than
doing it centrally, so that you don't have to create a whole new
distribution infrastructure that simply is nonexistent. So there is a
blend of those things and we try again to move the technology to
where its nearest term market opportunity lies. So we are looking
at, for instance, on the formulation side, we look at how does
including ethanol in a blend of fuel, what are the impacts of that?
What are the impacts on emissions? What are the impacts on
performance? How does the vehicle operate? What does the
vehicle have to do in order to accommodate that? We look at all of
those things as part of our transportation efficiency prospect, as
well as on the generation side, how do you make the stuff and
make it economical. But your points are very well taken and yes,
sir, we are working on all of that.
MR. OTTER. Thank you, Mr. Chairman, and thank you very
much for your response.
MR. HALL. I thank you, and I presume that you have gone
through, in your quest for Governor, how to spell potato. All right,
Mr. Bass, we recognize you at this time if you have questions.
MR. BASS. Thank you, Mr. Chairman. And I am just
fascinated, Dr.--
MR. ARVIZU. Arvizu.
MR. BASS. Arvizu.
MR. ARVIZU. May I help you? It is just a recreational vehicle,
RV, going to the zoo.
MR. BASS. I am unaccustomed--all right. On the biopower
issue, I am particularly interested in ethanol derived from cellulose
and most notably, from my region of the country, wood products.
I would like to visit your lab some time with a team of people from
my State who are involved in biology and so forth, and I look
forward to doing that. I just want to affirm that you have a robust
research and development project in the use of bacterias and other
bugs to convert various substances into ethanol. Is that a robust
program, with showing some results, promising results?
MR. ARVIZU. Well, the answer is, we would like to make it
more robust than it is today. We certainly are working on a
number of enzymes. That is the primary organism that takes you
from a cellulosic fibrous material into a simple sugar that you can
ferment.
MR. BASS. Can you skip the sugar part?
MR. ARVIZU. Yes, you can. In fact--
MR. BASS. Is that something you are working on or not?
MR. ARVIZU. --there is a project called "Genomes to Life," in
the Department of Energy. It is a basic energy science and what
we are trying to do is perhaps even consider engineering the
biomass resource so that it creates these enzymes naturally, in the
wild, so that those--we can do one-step processing and essentially
move the cost of cellulosic biomass down to as little as 60 cents a
gallon, which would be phenomenal. That is kind of the Holy
Grail. We believe that the science would allow that, with
continued support, so we are very bullish on the basic piece as well
as on the conversion piece now, which I think can solve a more
immediate problem.
MR. BASS. Do you think there are--one of the challenges
facing development of these enzymes is small versus large, and is
there any effort underway to examine the possibility of
establishing small-scale biodigesters that would create either
methane or ethanol, methane gas, which, as I understand it, is a
simpler process--
MR. ARVIZU. Yes, it is.
MR. BASS. --that could burn--I was going to come back for my
friend from California, Ms. Bono, but I don't think it is appropriate
with--
MR. HALL. Let us move along.
MR. BASS. Yes, sir. I can't even continue. To develop
biodigesters that could use wood residues, cardboard, paper, even
household garbage, to create energy, is this something that you are
familiar with or aware of? Is there any potential there?
MR. ARVIZU. Well, yes. You know, the breakthroughs in
enzyme formulation, if you will, is what I call a very Edisonian
process. We had a couple of partners, Novozymes and Genencorp,
that had a breakthrough, and what they were able to do is to create
a cocktail of enzymes, we called it. It was about 25 different
formulations of things that was just the right formulation to break
down corn stover into ethanol, into sugars that allow us to put into
ethanol. The breakthrough was the cost. They were able to reduce
the cost of that set of enzymes down from--well, it was a factor of
30. It is like 25 cents a gallon for the actual enzymes. Science can
teach us so much about how to engineer these materials rather than
do what we were doing, which essentially is trial and error. And
we did that and we ended up with some fairly significant results.
You know, everybody kind of applauded and celebrated and said
how do we use that? But there is still a lot of science left on
figuring out how much you engineer that in ways to do precisely
what you are talking about; is to take different kinds of feedstocks
and convert them to the same simple six-chain sugars that are very
easy to ferment, and then it becomes a much easier process. And
in fact, the capital equipment to make these production facilities
would be quite small.
MR. BASS. So if I were to bring people out to visit you who
are interested in this subject, they would learn a lot from the visit,
do you think?
MR. ARVIZU. Well, we would probably learn a lot as well.
MR. BASS. You have got plenty of expertise? Okay.
MR. ARVIZU. Yes, absolutely. And you are all welcome to do
that. We learn so much by what people are trying to accomplish
and then we can figure out how the technology can fit those needs.
MR. BASS. Okay, thank you very much. Thank you, Mr.
Chairman, for the courtesy.
MR. HALL. All right, thank you very much. I would look to
the next two witnesses that are going to testify here, and really
want to thank the two of you for your good testimony, and a good
service to your country.
MR. ARVIZU. Thank you, sir.
MR. HALL. It will be of great service as we pursue legislation
to match the good information that you have given us, and we
thank you very much. All right, we thank you, gentlemen. You
are in place now and, Mr. Novak, you will go first. Mr. Abate?
Did I say it right?
MR. ABATE. Abate.
MR. HALL. Abate?
MR. ABATE. Yes.
MR. HALL. Mr. Hammond, Vice President, Products,
Plextronics, Inc; Mr. Linebarger, Executive VP of Power
Generation Business; Dr. Katzer, a Visiting Scholar, Laboratory
for Energy and the Environment; and Mr. Cresci, Chairman,
Environmental Power Corporation. We will start off, Mr. Novak,
with you, and if you can, give us 4, 5, maybe 6 minutes of
generalization; then we will zero in on the questions we want to
ask. I recognize you at this time, sir. Turn your mic on.
STATEMENTS OF JOHN NOVAK, EXECUTIVE DIRECTOR, FEDERAL AND INDUSTRY ACTIVITIES,
ENVIRONMENT AND GENERATION SECTORS, ELECTRIC POWER RESEARCH INSTITUTE;
VICTOR R. ABATE, VICE PRESIDENT, RENEWABLE ENERGY, GE ENERGY; TROY D. HAMMOND,
VICE PRESIDENT, PRODUCTS, PLEXTRONICS, INC.; TOM LINEBARGER, EXECUTIVE VICE
PRESIDENT AND PRESIDENT, POWER GENERATION BUSINESS, CUMMINS, INC.; JAMES
KATZER, VISITING SCHOLAR, LABORATORY FOR ENERGY AND THE ENVIRONMENT,
MASSACHUSETTS INSTITUTE OF TECHNOLOGY; AND JOSEPH E. CRESCI,
CHAIRMAN, ENVIRONMENTAL POWER CORPORATION
MR. NOVAK. Thank you, Mr. Chairman. Good morning. I am
John Novak, with the Electric Power Research Institute. EPRI is a
nonprofit collaborative R&D organization headquartered in Palo
Alto, California, and we appreciate the opportunity to appear
before this subcommittee on this important topic.
Number one: the United States must keep all of its energy
options open to meet the uncertainties of the future. For
electricity, this means building and sustaining a robust portfolio of
clean, affordable options for the future, and ensuring the continued
use of the big five: coal, nuclear, gas, renewables, and end-use
energy efficiency. R&D can and will make a big difference. With
sustained levels of R&D, the cost of these five electricity options
can be substantially reduced over the next decade.
Number two: investment decisions being made today about the
next generation of electricity supply are complicated by four major
uncertainties, the future cost of CO2, the future price of natural gas,
spent nuclear fuel storage, and CO2 capture and storage.
Number three: we believe that prudent investment decisions for
plants that have to produce electricity for the next 30 to 40 years
will be increasingly based on the assumption of a carbon-
constrained future. Whether decisionmakers assume the cost of
carbon dioxide to be zero as it is today, or $30 per ton or $50 per
ton, dramatically changes the relative cost of various supply
options. We have taken an objective look across all the major
supply options, using variable costs for carbon dioxide and natural
gas, and factored in the technical progress that we think is
achievable over the next 10 years and reached a central conclusion;
that is, we have an extraordinary opportunity to begin building a
low-carbon portfolio by 2020. This portfolio would be insensitive
to the cost of carbon dioxide, and yet still be affordable. But R&D
is needed to achieve the technical progress to begin to put this
portfolio in place.
One reason this is so critical is that electricity is going to
become more important in the future. We have run scenarios that
show that electricity growth is relatively unaffected by global
climate change goals. Our scenarios show that the tighter the
limits on carbon dioxide, the greater the percentage of total energy
comes from electricity. You can think of it this way: electricity is
the only practical way to deliver clean energy on a large scale.
And for those of you who are interested in seeing this picture
unfold, I would recommend that you watch a presentation by our
President and CEO, Steve Specker, recently given at Resources for
the Future and available on the website that I have included in my
written testimony.
I would like to briefly mention some of the priorities for
electricity-based research and development. For coal-based
generation, EPRI believes research and development and
demonstration to be accelerated for both advanced combustion-
based technologies and for gasification technologies, or IGCC. I
want to point out that IGCC stands for integrated gasification
combined cycle. Some people have the misunderstanding the CC
stands for carbon or CO2 captured; it does not. Additional
processes, equipment, and energy are required to capture the CO2
from IGCC and to transport and store the CO2 in a geologic
formation. We think that CO2 capture for existing and new
pulverized coal-fired plants needs to be developed and
demonstrated. Large-scale, long-term CO2 demonstrations will be
needed, such as those in FutureGen and ongoing DOE R&D
programs. For air emissions, near-term work in mercury control
and demonstration needs to continue.
On nuclear power, the long-term future of nuclear energy must
be built on a solid foundation that is grounded in three current
ongoing nuclear energy initiatives: continued safe and effective
operation of our current fleet of reactors, near-term licensing and
deployment of advanced light water reactors, and licensing and
construction of a geologic repository at Yucca Mountain.
Significant R&D needs to exist for the current fleet and the new
fleet of advanced light water reactors, first, for development of a
new generation of high reliability, light water reactor fuel with
much higher burn-up. Other priorities include R&D in the areas of
age-related materials degradation, fuel reliability, equipment
reliability, and other areas. In the longer term, the United States
needs to develop a nuclear system having hydrogen production
capability. And finally, EPRI supports the long-term goals in the
Global Nuclear Energy Partnership proposed by the
Administration.
Renewable priorities include: integration of large intermittent
resources, including power electronics, interconnection,
communication and control of distributed generation; cost-
effective energy storage technology; and demonstration ocean
renewable wave, tidal, and wind/wave hybrid concept for power
generation.
End-use efficiency and demand R&D priorities: development
of advanced communication infrastructure that links electricity
consumers with a fully dynamic electricity marketplace; continued
development of smart end-use devices; and ensure that we have
regulatory and market structures that support end-use efficiency
and demand response objectives. For natural gas, we need to see
cost reduction in natural gas supply, including the ability to site,
obtain, and liquefy natural gas. Distributed generation cost
reductions and efficiency increase allowed DG to compete on the
system with larger generation. And finally, fuel cells will also find
niche applications and require R&D until they are cost competitive
with central stations.
Mr. Chairman, that concludes my testimony. Thank you.
[The prepared statement of John Novak follows:]
PREPARED STATEMENT OF JOHN NOVAK, EXECUTIVE DIRECTOR,
FEDERAL AND INDUSTRY ACTIVITIES, ENVIRONMENT AND
GENERATION SECTORS, ELECTRIC POWER RESEARCH INSTITUTE
Introduction
I am John Novak, Executive Director of Federal and Industry
Activities for the Environment and Generation Sectors of the
Electric Power Research Institute. EPRI is a non-profit,
collaborative R&D organization headquartered in Palo Alto,
California. EPRI appreciates the opportunity to provide testimony
to the Subcommittee on the next generation of electricity based
technology.
Electricity Generation Options
Each year, the Advisory Council and Board of Directors of the
Electric Power Research Institute convene a diverse group of
leaders from industry, academia and government to discuss critical
issues facing the electricity industry and society. The seminar
format is designed to air diverse views, to explore common ground
and, where possible, to develop a new pathway forward. Last
year's Summer Seminar was focused on "Making Billion Dollar
Advanced Generation Investments in an Emission-Limited
World." Attached is the background paper for last year's seminar.
The paper contains an outlook for generation technology for
the years 2010 and 2020. We have updated information from the
generation technology outlook to reflect more current events and
trends and have provided some of this updated information in the
table below.
Comparative Costs of 2010 Generation Options
Technology
Cost of
Electricity,
$/MWh
Key Assumptions
Pulverized Coal
41
Coal price: $1.50/mmbtu
Nuclear Power
46
Capital Cost: $1400 -
$1700 per kW
IGCC without
carbon capture
47
Coal price: $1.50/mmbtu
Natural Gas
Combined Cycle
56
Fuel Cost: $6/mmbtu
Biomass
62
Wind
75
Capacity Factor: 29%
Comparative Costs of 2020 Generation Options
Technology
Cost of
Electricity,
$/MWh
Key Assumptions
Pulverized Coal
64
Coal price: $1.50/mmbtu
With CO2 capture,
transport, storage
Nuclear Power
46
Capital Cost: $1700 per
kW
IGCC with CO2
capture
54
Coal price: $1.50/mmbtu
Natural Gas
Combined Cycle
52
Fuel Cost: $6/mmbtu
Biomass
44
New technologies to reduce
cost
Wind
52
Capacity Factor: 29%;
substantial technology
improvement
Key Points
EPRI would like to make six key points drawn from the
analysis in the attached paper and from the discussions at the
summer seminar.
1. The U.S. must keep all of its energy options open to meet
the uncertainties of the future. For electricity, this means
building and sustaining a robust portfolio of clean,
affordable options for the future - ensuring the continued
use of the "big five": coal, nuclear, gas, renewables, and
end-use energy efficiency.
2. R&D can and will make a big difference. With sustained
levels of R&D, the costs of these five electricity options can
be substantially reduced over the next decade.
3. Investment decisions being made today about the next
generation of electricity supply are complicated by four
major uncertainties:
a. Future cost of CO2
b. Future price of natural gas
c. Spent nuclear fuel storage
d. CO2 capture and storage
4. We believe that prudent investment decisions for plants
that have to produce electricity for the next 30-40 years will
be increasingly based on the assumption of a carbon
constrained future. Whether decision makers assume the
future cost of CO2 to be zero as it is today, or $30/ton, or
$50/ton, dramatically changes the relative cost of the
various supply options.
5. We have taken an objective look across all the major supply
options, using variable costs for CO2 and natural gas, and
factored in the technical progress that we think is
achievable over the next 10 years, and reached a central
conclusion --- That is, we have an extraordinary
opportunity to put a low-carbon portfolio in place by 2020.
This means the technology would be ready by 2015, and
installed by 2020. This portfolio would be insensitive to
the cost of CO2, and yet still be affordable.
6. One reason this is so critical is that electricity is going to
become more important in the future. We have run
scenarios, and invariably, the tighter the limits on CO2, the
more electricity that's going to be required globally. You
can think of it this way -- electricity is only practical way to
deliver clean energy on a large scale.
For those of you interested seeing this picture unfold, I would
recommend that you watch a presentation by our CEO, Steve
Specker, recently given at Resources for the Future. The web link
is http://www.eande.tv/transcripts/?date=040406#transcript
R&D Priorities
Following is a summary of EPRI's priorities for electricity
based R&D in five key areas: coal, nuclear, gas, renewables and
end-use energy efficiency. EPRI would be pleased to discuss these
in greater detail with the Subcommittee.
Coal
Coal Based Generation
? EPRI believes RD&D should be accelerated for both
combustion-based technologies and for gasification
technology. Three major areas of work need to be emphasized,
o 1) Integrated Gasification Combined Cycle work on
hydrogen turbines, reliability, cost reduction, and
integration with CO2 ;
o 2) very efficient pulverized coal combustion with
options for CO2 capture and
o 3) fluidized bed combustion with options for near zero
pollutant emissions and CO2 capture.
? Related technology deployment to reduce costs (initially
without CO2 capture until storage is demonstrated) as is being
done in conjunction with EPRI's CoalFleet for Tomorrowr
Program and as a result of the EPACT 2005 enactment.
CO2
? To assure public acceptance, multiple (~5) large scale ( > 1
MTY), long term CO2 storage demonstrations in different
geologies and locations will be needed in addition to
FutureGen and DOE RD&D, to assure that storage is safe and
effective.
? Post combustion capture for existing and new PC-fired plants
needs to be developed and demonstrated.
Emissions
? Near-term work in mercury control and demonstration to
assure that all equipment and coal types can be reliably
controlled require completion of the field testing program
currently underway by industry and government
Gas
? Cost reduction in natural gas supply, including the ability to
site and obtain LNG, since LNG use is projected to grow
rapidly.
? Distributed generation (DG) cost reduction and efficiency
increases in DG to allow DG to compete on the system with
larger generation.
? Fuel Cells and applications which support combined heat and
power will also find niche applications and require RD&D
until they are cost competitive with central stations.
Nuclear
? Significant R&D needs exist for the current fleet and the new
fleet, especially in areas of age-related materials degradation,
fuel reliability, equipment reliability and obsolescence, plant
security, cyber security, and low-level waste minimization.
? Development of a new generation of high reliability LWR fuel
with much higher burnup that will better utilize uranium
resources, improve operating flexibility, and significantly
reduce spent fuel volume and transportation needs, resulting in
additional improvements in nuclear energy economics. These
are mid-term R&D needs whose impact would be considerable
if accelerated with government investment.
? In the longer term develop a nuclear system having hydrogen
production capability. Many believe that a hydrogen economy
is essential for revolutionizing transportation, in which case
the demand for competitive and environmentally responsible
hydrogen production will greatly increase. A large-scale,
economical nuclear source would hasten that future.
Renewables
? Integration of large intermittent resources, including power
electronics for more effective conversion, smoothing and
control of renewable resources
? Interconnection, communication and control of distributed
generation
? Incremental, low impact hydropower expansions, advanced
hydro turbine concepts and performance optimization tools
? Cost-effective energy storage technology for utility T&D
applications with renewable resources
? Demonstration of ocean renewable wave, tidal and wind-wave
hybrid concepts for power generation (see also EPRI Ocean
Energy work)
End Use Efficiency and Demand Response
? Development of an advanced communications infrastructure
that links electricity consumers with a fully dynamic electricity
marketplace. Information could be exchanged directly with
smart end-use devices, for example, so consumers would not
have to make hourly or daily energy choices. This "prices to
devices" approach would allow the appliance itself to optimize
its operation under varying costs and conditions.
? Ensure we have regulatory and market structures that support
end-use efficiency and demand response objectives.
? Continue development of smart end-use devices. An essential
premise of efficiency and demand response strategies (as well
as of the provisions of the U.S. Energy Policy Act of 2005) is
an infrastructure of intelligent electricity meters and end-use
devices capable of two way communication with the electricity
system. Many end-use technologies are beginning to evolve,
through advances in distributed intelligence, from static
devices to devices with much more dynamic capabilities.
The Electric Power Research Institute was established in
1973 as an independent, nonprofit center for public interest energy
and environmental research. EPRI brings together members,
participants, the Institute's scientists and engineers, and other
leading experts to work collaboratively on solutions to the
challenges of electric power. These solutions span nearly every
area of electricity generation, delivery and use, including health,
safety, and environment. EPRI's members represent over 90% of
the electricity generated in the United States.
Summary of EPRI Testimony - Key Points
1. The U.S. must keep all of its energy options open to meet the
uncertainties of the future. For electricity, this means
building and sustaining a robust portfolio of clean,
affordable options for the future - ensuring the continued
use of the "big five": coal, nuclear, gas, renewables, and
end-use energy efficiency.
2. R&D can and will make a big difference. With sustained
levels of R&D, the costs of these five electricity options can
be substantially reduced over the next decade.
3. Investment decisions being made today about the next
generation of electricity supply are complicated by four
major uncertainties:
a. Future cost of CO2
b. Future price of natural gas
c. Spent nuclear fuel storage
d. CO2 capture and storage
4. We believe that prudent investment decisions for plants that
have to produce electricity for the next 30-40 years will be
increasingly based on the assumption of a carbon
constrained future. Whether decision makers assume the
future cost of CO2 to be zero as it is today, or $30/ton, or
$50/ton, dramatically changes the relative cost of the various
supply options.
5. We have taken an objective look across all the major supply
options, using variable costs for CO2 and natural gas, and
factored in the technical progress that we think is achievable
over the next 10 years, and reached a central conclusion ---
That is, we have an extraordinary opportunity to put a low-
carbon portfolio in place by 2020. This means the
technology would be ready by 2015, and installed by 2020.
This portfolio would be insensitive to the cost of CO2, and
yet still be affordable.
6. One reason this is so critical is that electricity is going to
become more important in the future. We have run
scenarios, and invariably, the tighter the limits on CO2, the
more electricity that's going to be required globally. You
can think of it this way -- electricity is only practical way to
deliver clean energy on a large scale.
For those of you interested seeing this picture unfold, I would
recommend that you watch a presentation by our CEO, Steve
Specker, recently given at Resources for the Future. The web link
is http://www.eande.tv/transcripts/?date=040406#transcript
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MR. HALL. I thank you. We have a vote on the floor and we
will be in recess until 12:20.
[Recess.]
MR. MURPHY. [Presiding] All right. This hearing is back in
session. I will be sitting in until Mr. Hall returns. We are going to
continue on. Mr. Novak, you completed your testimony. We will
go now to Victor Abate, who is the Vice President of Renewable
Energy with GE Energy. Proceed. Make sure the microphone is
on and close to you. Thank you.
MR. ABATE. Yes. Mr. Chairman and members of the
committee, I am Victor Abate, Vice President for Renewable
Energy at GE Energy. I appreciate the opportunity to testify today
on the future of wind power.
GE is a technology leader in the design and manufacture of
power-generating systems that operate on a wide variety of fuels.
In 2002, we added wind energy to our portfolio because we
recognized the global demand for cleaner and more cost-effective
renewable power. We see wind as a viable energy solution capable
of complimenting the world's energy portfolio, and benefiting
greatly over time from advances in turbine technology.
To give you a feel for today's wind turbine technology, picture
taking a three-bladed rotor the size of a football field, turning it
vertical and sliding it 30 stories into the air, mounting it on a 100-
ton locomotive that is balancing on a pole and spinning it into the
wind. That is analogous to what we do with our 1.5 megawatt
wind turbine, where this single wind turbine produces enough
electricity to power more than 500 U.S. homes.
We see two critical factors driving the economics for wind
power. The first is the quality of the wind resource, and the United
States has abundant high quality wind resources providing us with
a global economic advantage for the development of wind energy.
In fact, the U.S. resources are significantly better than other
countries, like Germany, that actually lead in terms of installed
wind capacity. The second is wind turbine technology and its
ability to efficiently capture energy from the wind. A critical
indicator of technology level is illustrated in the wind turbine's
capacity factor. The capacity factor is the ratio of energy produced
versus the maximum nameplate rating of the machine over the
same period.
Since 2002, the capacity factor of GE state-of-the-art wind
turbines has improved from 36 percent to 47 percent, meaning
more free energy is being captured per turbine, reducing the cost of
electricity by more than 1 cent a kilowatt hour over this period.
The capacity factor has improved because of technology
advancements in wind turbine efficiency, reliability, and
availability. Our wind turbines are currently available to generate
power more than 97 percent of the time, which is up dramatically
from 85 percent in 2002. This is the result of advancements in
turbine design, remote monitoring, and system reliability
modeling. Since 1980, the cost of wind-generated electricity has
dropped by 80 percent as the result of technology advancements.
Today the cost of electricity from wind power, without any
incentives, is around 7 cents a kilowatt hour. While this is clearly
more expensive than today's mature nuclear and coal technologies,
it is currently comparable to the cost of electricity generated from
natural gas at the recent elevated gas price levels. And it also
provides a natural hedge against rising fuel costs in the future, as
wind energy provides us with a fixed cost of electricity.
The Federal Production Tax Credit provides the necessary
economic incentive for power producers to generate power from
wind, and keeps equipment suppliers, such as GE, investing in
technology advancements, and reducing the cost of wind power.
GE is investing more than $70 million annually in wind turbine
R&D, focused at improving turbine performance, and hence wind
power economics.
In 2005, the United States installed nearly two and a half
gigawatts of wind energy, expanding its installed base to over nine
gigawatts, which now provides enough wind energy to power over
2.3 million homes. The United States is well positioned to benefit
from this ample, clean, and carbon emissions-free domestic
resource. We believe wind energy will be an integral part of the
world energy mix throughout the 21st century.
Thank you for allowing me to participate in this hearing, and I
look forward to your questions.
[The prepared statement of Victor Abate follows:]
PREPARED STATEMENT OF VICTOR ABATE, VICE PRESIDENT,
RENEWABLE ENERGY, GE ENERGY
Mr. Chairman and members of the Committee, I am Victor
Abate, Vice President, Renewable Energy at GE Energy. I
appreciate the opportunity to testify today on the future of
renewable energy.
GE is a power generation technology leader with leading
experience in biomass, solar and wind technology. At GE, we
believe renewable energy will be an integral part of the world
energy mix throughout the 21st Century. Today, I'd like to focus
specifically on the wind industry, but would welcome questions on
other renewables. I will address my testimony to three issues: the
state of wind technology today; costs associated with wind energy;
and opportunities to drive costs down in the future through
continued technology advancement.
Wind Energy and the US Energy Future
Wind energy can become a significant player in the US energy
portfolio and is the most commercially viable renewable energy
resource today. The industry has recently seen record-breaking
growth; in 2005, the US installed 2,431 MW of wind energy
contributing to a total installed base of 9,149 MW, which is
enough energy to serve 2.3 million homes. Although today's wind
technology supplies less than 1 percent of US electric generation,
the total installed base has nearly doubled over the last three years.
Wind energy is currently being used to generate power in 30 states.
The two critical factors for success in the wind industry are 1)
the quality of the wind resource, and 2) advances in wind turbine
technology. The US is well positioned in both of these areas.
When compared to Germany, the country with the world's
largest wind energy installed base, and other top country wind
installers, the US has significantly better wind resources. In fact,
the American Wind Energy Association (AWEA) claims that
current US wind resources have the potential to supply up to three
times the total electricity generated in the US today.
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Tapping the potential of wind as an energy source makes use of
this abundant, domestic, low to zero carbon emissions resource
while reducing overall US dependence on imported energy. For
example, a 100 MW wind farm in New York State would produce
the energy equivalent to 590,000 barrels of oil per year and
displace 260 million pounds of carbon dioxide per year.
Furthermore, wind is a fixed cost source of electricity which
hedges rising prices for other energy sources, such as natural gas
and oil.
In January, President Bush stated that the US could one day
generate up to 20 percent of its electricity needs through wind
technology. We believe that this vision is achievable through
continued technology advancement.
Current Wind Energy Technology
The key measure of the ability to generate electricity from
wind energy is the turbine's "capacity factor." Capacity factor is
defined as the ratio of the actual energy produced by a turbine over
a time period versus the maximum energy the turbine could
produce if operated at full nameplate rating over the same time
period. For example, a 1 MW unit can produce a maximum of
168,000 kWh of electricity in one week. If the turbine actually
produces 84,000 kWh, it would have a capacity factor of 50% for
that week.
The capacity factor for state-of-the-art wind turbines has
increased substantially since 2002. As shown on the chart below,
in 2002, the best-in-class capacity factor of wind turbines was less
than 36% at a wind speed of 8 meters per second (m/s)(a speed
which is representative of the quality of US wind resources). In
2006, the capacity factor of the best-in-class machines has risen to
approximately 47%. As a point of reference, a one-point increase
in capacity factor over the US wind installed base could produce
enough electricity to support 90,000 average US households.
Three key factors influence the turbine capacity factor: blade
size, turbine efficiency and availability, and the wind resources at
the site. Increases in rotor sizes and turbine availability have
contributed to the significant jump in the capacity factor.
Since 2002 rotor sizes in similar wind regimes have increased
by 17% from 70.5 meters to 82.5 meters, thereby increasing the
energy capture of the turbine by over 35%. This also benefits
energy production by allowing the turbine to begin generating
power at lower wind speeds.
Availability refers to the percentage of time that a wind turbine
is ready to generate power. In 2002, availability of then state-of-
the-art wind turbines was less than 85 percent. As the result of
technology advances in remote monitoring, diagnostics and the
utilization of GE reliability modeling, today's wind turbines have
availability of more than 97 percent. A one percent increase in
availability over the US wind installed base could produce enough
electricity to support 28,000 average US households.
Proper siting of wind turbines also is critical to energy
production and capacity factor. As shown below, siting the same
1.5xle unit at an 8 m/s average site versus a 7 m/s average site will
create a 9 point increase in the capacity factor, from 38% to 47%.
<GRAPHICS NOT AVAILABLE IN TIFF FORMAT>
Costs
Since 1980, the cost of wind-generated electricity has seen an
80 percent price reduction as the result of technology
advancements in availability, efficiency and output. Today, the
<GRAPHICS NOT AVAILABLE IN TIFF FORMAT>
Cost of Energy for wind, exclusive of any incentives, is 7
cents/kWh.
Wind is more competitive when the 1.9-cent per kWh
production tax credit for wind is applied. The Federal production
tax credit provides a necessary economic incentive for power
producers to generate power from wind. As illustrated below, the
role of the production tax credit in stimulating the installation of
wind generation is clear. When the wind production tax credit has
been allowed to expire, new installed capacity has dropped
dramatically in the following year due to lack of component
availability. Therefore, a more stable incentive for wind
generation can support the long-term investment by suppliers
needed to assure that manufacturing capability is available for
critical components.
<GRAPHICS NOT AVAILABLE IN TIFF FORMAT>
For example, today we are seeing a supply-constrained
industry where suppliers are unable to provide key components
such as blades and gearboxes, limiting the number of wind turbines
being manufactured. To meet the market demand in 2006 and
2007, the supply chain needs to make multi-million dollar
investments in production capacity. However, unless OEMs can
assure suppliers of a future market, suppliers may not make the
long-term investments that are necessary. A predictable incentive
policy is essential if we are to grow the wind industry in the US.
Wind Technology Advances for the Future
GE is investing more than $70 million annually in advancing
wind turbine technology to further lower the cost of electricity.
These efforts are focused in three key areas: larger and more
efficient rotors, advanced loads management and enhanced grid
stabilization.
The rotors on wind turbines define the energy capture
capabilities of the unit. This energy capture is a function of two
parameters: rotor diameter and blade efficiency. Larger rotors
capture more energy, but typically increase the up tower mass of
the unit and therefore, increase the weight and cost of the
supporting structures. Utilization of higher technology and lighter
weight material will allow longer blades without increased weight.
In addition, advances in computer modeling will allow significant
increases in blade efficiency through increased understanding of
the complex flow fields around turbine blades.
The rotor is also a key contributor to the loads characteristics
of the wind turbine. Advances in passive and active loads
management techniques, through advanced controls and materials,
will allow increases in turbine size without proportional growth in
weight.
Voltage regulation is key to electrical grid stability. Wind turbines
have progressively increased their capability to stay on line during
grid voltage fluctuations and assist with voltage regulation. In the
future, wind turbines will be a vital part of grid voltage
stabilization through advanced power electronics which will be
capable of managing grid voltage, even when the wind is not
blowing.
Continued development of low speed wind technologies - an
important focus of government/industry research and development
partnerships - will allow the use of wind turbines in lower class
wind locations that would otherwise not be economically feasible.
Conclusion
In conclusion, wind power is a cleaner, viable offset to fossil
fuel generation. The U.S. is well positioned to benefit from this
ample, domestic resource and it is evident that wind can become a
significant player in the US energy mix through its proven
technology and strong growth. Predictable incentives, however, are
still needed to sustain this momentum and drive costs down.
Thank you for the opportunity to present this testimony. I look
forward to your questions.
MR. MURPHY. Thank you very much. And now we are joined
by Dr. Troy D. Hammond, Vice President of Products with
Plextronics, a company around Pittsburgh, and we are pleased that
you could be here and we were able to have you here. Thank you
so much for being with us today. Please proceed.
MR. HAMMOND. Well, I wish to thank Chairman Hall and the
members of the Subcommittee on Energy and Air Quality for the
opportunity to present and discuss my views regarding new and
innovative solar technologies. I have submitted a written copy of
my testimony for the record and I will summarize it for you today.
First of all, I commend the Chairman for his leadership in having
this hearing. This dialogue is important for America, and I thank
the subcommittee for addressing the importance of innovation
related to our current energy challenges.
My name is Troy Hammond, and I am the Vice President of
Products for Plextronics, Incorporated, in Pittsburgh, Pennsylvania.
Plextronics was founded in 2002, as a spinout of Carnegie Mellon
University. It was co-founded by Professor Richard McCullough,
Dean of the Mellon College of Science at Carnegie Mellon
University, where he continues to play an active role in
Plextronics. Our company is the leader of conductive polymer
research, development, and commercialization. These conductive
polymers are a type of plastic material that promises to shepherd in
a new era of low-cost electronic devices, including polymer
photovoltaics, or solar cells.
On January 31, in his State of the Union address, the President
announced the Advanced Energy Initiative, stating that America's
energy challenges, including our continued economic and national
security, can be addressed in part through revolutionary solar
technology. The President set out a clear objective for the
contribution of solar photovoltaic energy to the Nation's energy
supply; namely, to reduce the cost of solar photovoltaic
technologies so that they become cost competitive by the year
2015. The President has good reason to support solar technology.
Solar photovoltaic devices directly convert sunlight to electric
power in a clean, renewable manner, with no direct emissions into
the atmosphere; however, today's solar technology cannot yet
deliver cost-competitive power.
While residential, commercial, and industrial customers pay
less than 10 to 12 cents per kilowatt hour in their electric bills,
solar energy costs 25 to 50 cents per kilowatt hour or more
depending on the technology and the geographical location. As an
additional hurdle, the cost of solar technology comes as a large
capital investment at the time of purchase. A residential consumer
buying today's products would pay $10,000 or more for two
kilowatts peak of solar modules. Installation and necessary
electronics increase the total cost to $15,000 to $20,000. Projected
price decreases generated from the annual 30 to 40 percent market
growth in solar have flattened, if not reversed. The President's
objective will require a reduction factor of three to five in the
installed system cost, which will translate into an energy cost of
below 10 cents per kilowatt hour by the year 2015. Clearly, if
America achieves these targets, it will begin changing for the
global energy industry.
While some would propose that these goals can be achieved
through evolutionary development of current technology, even
advocating tens of billions of dollars of subsidies, we believe
revolutionary thin-film technologies can unlock the sun's potential.
Indeed, America's engine of research and invention has been
making critical progress toward new solar technologies for many
years. For example, polymer photovoltaics utilize a novel version
of plastics that strongly absorb the sun's light and behave like a
semiconductor, analogous to silicon in the generation of electricity.
Rather than requiring expensive manufacturing equipment and
processes, these polymers are turned into inks that can literally be
printed much like a newspaper is printed. The total manufacturing
cost can be as much as a factor of 10, less costly for each square
foot of solar module.
Key discoveries in this technology were made domestically.
Current state-of-the-art polymer solar cells utilize a technology
invented by Professor McCullough and manufactured by
Plextronics; to be clear, additional performance improvement is
required. Plextronics' scientists have developed a portfolio of new
polymer technologies that have the potential to double this
performance and extend the lifetime of the technology. The focus
of our technical development activity is the realization of this
performance potential, and when achieved, broad
commercialization is possible.
Federal support at this juncture is critical. The President's
2007 Budget proposes a Solar America Initiative, with a funding
increase of $65 million over Fiscal Year 2006. Given the impact
that economic solar energy could have on global energy supply, we
urge Congress not only to fund this program fully, but also to
ensure America's leadership in revolutionary new solar
technologies is accelerated by the Solar America Initiative. Thank
you.
[The prepared statement of Dr. Troy D. Hammond follows:]
PREPARED STATEMENT OF DR. TROY D. HAMMOND, VICE
PRESIDENT, PRODUCTS, PLEXTRONICS, INC.
Thank you, Chairman Hall and members of the Subcommittee
on Energy and Air Quality for the opportunity to present and
discuss my views regarding new and innovative solar technologies.
I have submitted a written copy of my testimony for the record and
will summarize it for you today. First of all, I commend Chairman
Hall for his leadership in having this hearing. This dialogue is
important for America and I thank your Subcommittee for
addressing the importance of innovation related to our current
energy challenges.
My name is Troy Hammond and I am the Vice President of
Products for Plextronics, Inc. in Pittsburgh, Pennsylvania.
Plextronics was founded in 2002 as a spin-out of Carnegie Mellon
University and was co-founded by Prof. Richard McCullough,
Dean of the Mellon College of Science at Carnegie Mellon
University, where he continues to play an active role in
Plextronics. Our company is the leader of conductive polymer
research, development, and commercialization. These conductive
polymers are a type of plastic material that promise to shepherd in
a new era of low-cost electronic devices including polymer
photovoltaics, or solar cells.
On January 31, in his State of the Union address, The President
announced the Advanced Energy Initiative stating that America's
energy challenges, including our continued economic and national
security, can be addressed in part through revolutionary solar
technology. The President set out a clear objective for the
contribution of solar photovoltaic energy to the nations energy
supply, namely to reduce the cost of solar photovoltaic
technologies so that they become cost competitive by 2015.
The President has good reason to support solar technology.
Solar photovoltaic devices directly convert sunlight to electric
power in a clean, renewable manner with no direct emissions into
the atmosphere.
However, today's solar technology cannot yet deliver cost
competitive power. While residential, commercial and industrial
customers pay less than $0.10 - 0.12 per kilowatt-hour in their
electric bills, solar energy costs $0.25 to $0.50 per kilowatt-hour or
more depending on the technology and the geographical location.
As an additional hurdle, the cost of solar technology comes as a
large capital investment at the time of purchase. A residential
consumer buying today's products would pay $10,000 or more for
2 kilowatts-peak of solar modules. Installation and necessary
electronics increase the total cost to $15,000 to $20,000. Projected
price decreases from the annual 30-40% market growth have
flattened if not reversed. The President's objective will require a
factor of three to five reduction in the installed system cost, which
will translate into an energy cost of below $0.10 per kilowatt-hour
by 2015.
Clearly, if America achieves these targets, it will be game-
changing for the global energy industry. While some would
propose that these goals can be achieved through evolutionary
development of current technology, even advocating tens of
billions of dollars of subsidies, we believe revolutionary thin film
technologies can unlock the sun's potential. Indeed, America's
engine of research and invention has been making critical progress
toward new solar technologies for many years.
For example, polymer photovoltaics utilize a novel version of
plastics that strongly absorb the sun's light and behave like a
semiconductor, analogous to silicon, in the generation of
electricity. Rather than requiring expensive manufacturing
equipment and processes, these polymers are turned into inks that
can literally be printed much like a newspaper is printed. The total
manufacturing cost can be as much as a factor of ten less costly for
each square foot of solar module.
Key discoveries in this technology were made domestically.
Current state-of-the-art polymer solar cells utilize a polymer
technology invented by Prof. McCullough and manufactured by
Plextronics, yet additional performance improvement is required.
Plextronics' scientists have developed a portfolio of new polymer
technologies that have the potential to double this performance and
extend the lifetime of the technology. The focus of our technical
development activity is the realization of this performance
potential; when achieved, broad commercialization is possible.
Federal support at this juncture is critical. The President's
2007 Budget proposes a Solar America Initiative with a funding
increase of $65 million over FY06. Given the impact that
economic solar energy could have on global energy supply, we
urge Congress not only to fund this program fully, but also to
ensure America's leadership in revolutionary, new solar
technologies is accelerated by the Solar America Initiative.
Summary
1. The President's Charge
a. Make solar photovoltaic technology cost competitive
by 2015
b. Address this energy challenge through revolutionary
solar technology
2. The Rationale
a. Direct conversion of solar energy into electricity
b. Clean, renewable, no emissions
3. The Issue
a. Today's technology is not cost competitive
b. $0.25-0.50 or more per kilowatt-hour versus $0.10 or
less
c. Large up-front capital costs (e.g. $20,000 for the
residential consumer)
d. Evolutionary improvements, even subsidized, won't
suffice
4. The Opportunity
a. Thin-film technologies promise revolutionary costs
b. Polymer photovoltaics can be printed like inks at 5-10x
lower cost
5. Plextronics, Inc.
a. Key discoveries by Prof. McCullough; developed by
Plextronics
b. Potential to double current performance and enable
commercialization
6. Federal support is critical, including the Solar America
Initiative
a. Fully fund this Initiative
b. Demand strong focus on revolutionary technologies
MR. MURPHY. Thank you, Dr. Hammond. Our next person
testifying is Mr. Tom--is it Linebarger?
MR. LINEBARGER. Linebarger.
MR. MURPHY. Linebarger, Executive Vice President and
President of Power Generation Business for Cummins. Thank you.
You may proceed.
MR. LINEBARGER. Thank you, Mr. Chairman, and thank you,
members of the committee. It is an honor to be here, and thank
you for inviting me to testify. I have a written statement that I
would like to put in the record, and I also have a brief oral
testimony.
I will, of course, be brief. My name is Tom Linebarger. I am
the President of Cummins Power Generation, and it is a division of
Cummins, Incorporated. We supply a wide range of power
generation equipment, from very small units of four kilowatts or so
used for recreational uses to large power generators up to 2.7
megawatts for large industrial loads. All Cummins Power
Generation equipment would be generally classified as distributed
energy, and that is mostly what I want to speak to you about today.
Like the other witnesses, I think today's hearing is really
important. Obviously, reliable and cost-effective energy for the
long run is among the most important issues facing the country
today. It is my belief that we need to capitalize on the full range of
power generation technologies available in order to provide a
balanced portfolio of energy, and I think the committee is wise to
be looking ahead and looking broadly for solutions.
If I could, I would like to define distributed energy.
Distributed energy is electricity that is generated near the point of
use as opposed to a centralized power station, which would then
send electricity over hundreds of miles, typically, in transmission
lines. Most of our power today in the United States, of course, is
generated by central stations, but already more than 5 percent of
power is generated in distributed form. Distributed energy can use
a wide range of fuels. Most of the fuels mentioned today can be
used in distributed form, and our own equipment, for example, can
use biofuels, coal bed methane, and many other fuels.
The benefits of distributed energy are many. I will just
mention a few here. First, it is a compliment to the electrical grid.
It provides more reliability to the grid by providing built-in support
and also relieving bottlenecks in the grid. It is quickly deployed
and flexible in size and location. I just brought a small model of a
typical unit that we might supply in an emergency response, and
we can fit the entire two megawatt unit in the back of a semi truck,
ready to be installed, and we have used these units to respond to
many emergencies. I will mention a few later. Emergency
backup, in stationary form, obviously can protect our important
industries and facilities, and this kind of backup is more and more
necessary as we see grid failures and other disasters that impact
our critical facilities. Distributed energy is environmentally
friendly and also efficient, and that is increasingly so as we
improve technologies.
I would like to just highlight a couple of examples that I am
familiar with from experience. Cummins has had a distributed
energy deployment that I think highlights some of these benefits.
First, a couple of years ago there was a drought in Mexico, where a
Mexican utility needed to bring 160 megawatts online, and they
were shooting to get it online in 45 days. So using units just like
this one that I showed here, we were able to get all 160 megawatts
online and available for homes in the area in actually less than 45
days. In fact, we completed the project in 41. To put up new
power stations would've taken them certainly more than a year and
probably more like two years; so very quick and very flexible.
A similar example would be, today, we provide 72 megawatts
to First Energy, the utility First Energy, and these units are based
in New Jersey. It provides peaking support, which reduces the cost
of providing energy to consumers in that area by taking off peak
loads. And these same units, during the winter, we were able to
redeploy them to help facilities, after Hurricane Katrina, come
back online more quickly. We were able to, again, drive them
down in trucks like this to provide quick response. Similarly, in a
grid-support application, we have 96 megawatts on Long Island
where LIPA is building a new transmission line, and while that line
is being built, they will use these distributed energy resources to
keep their consumers with power. In the emergency backup
examples, there are many, but just in the Northeast blackout, for
example, many of our units were deployed at hospitals, which,
because they were there, people who were undergoing operations
when the blackout occurred, those operations were able to
continue, and obviously those backup units were really important
to those that were on the operating table. Refineries were able to
restart more quickly after Katrina because they had emergency
backup power ready to go and already deployed.
As an example of the efficiency and environmental benefits of
distributed energy, we have one unit that is at Chicago's Museum
of Science and Industry that allows them to use their unit for
peaking power. They also have a combined heat and power
application where they can use hot water to provide the cafeteria
and other facilities at the museum with hot water and steam. And
while this reduces the cost of energy for them, it also allows them
to come off the grid at peak times in the summer, and their cost of
energy is significantly reduced.
This committee has already recognized, I think, the value of
distributed energy technologies. Last year's Energy Policy Act
authorized $760 million over 3 years for distributed energy
research and related technologies. However, I would note that the
Department of Energy only spent about $60 million last year on
distributed energy, and this year is asking for significantly less,
around $30 million. My concern is that it will have a negative
impact on research in this area when we are starting to make some
significant advances in efficiency and cost.
This committee also adopted an amendment by Congressmen
Buyer and Boucher on interconnection. This requires States to
hold proceedings on developing interconnection standards. Also,
Congressmen Terry and Doyle co-chaired the House Distributed
Energy Caucus, and this caucus takes a lead in developing policies
to promote and deploy distributed energy. Congresswoman
Wilson, who was here earlier, has a long history with
interconnection issues. All of these things are helping to get
distributed energy deployed more widely and more effectively in
the energy infrastructure.
However, I still believe that much more needs to be done for
distributed energy to reach its potential. There is significant
technology work that needs to be done for these units to reach their
maximum efficiency levels, and to expand their use of bio and
renewable fuels, further improve emissions and air quality, and
understand their role in the grid more broadly. And I guess what I
am asking here is that we make sure the money that has been
authorized is spent on these critical priorities.
As an example of the R&D work that the Department of
Energy can continue to do that would really help is the ARES
project. I am familiar with this project because Cummins, along
with two other industry participants, has been working on this
ARES project for 5 years now with the Department of Energy.
This project set out efficiency goals for natural gas generators. We
started at a 37 percent efficiency. We have already been able to
increase the efficiency to 44 percent, and our target is 50 percent
on relatively low amounts of funding. The work needs to continue
until the goals are achieved because we have made significant
progress. In addition, we can identify other similar areas of
technology that could be funded to provide some of the benefits I
mentioned earlier.
Secondly, I think that we need to promote combined heat and
power as a significant element of distributed energy. Combining
heat and power offers efficiencies north of 85 or 90 percent due to
the use of waste heat. Unfortunately, CHP is a significantly
underutilized technology today. There are a number of barriers
and risks to implementing these projects, and in order to get more
projects done, we need to recognize the benefits to the public of 85
or 90 percent efficiency and provide incentives. Many more
projects will get done with relatively small incentives, given how
close some of the economics are on some of these projects. Many
other countries have done similar kind of incentives and have had
good results in terms of deploying combined heat and power. I
offer that the same would be true with landfill gas, which is a good
renewable source of fuel, but again, because of the risks in some of
these projects, incentives are needed in order to get more projects
off the ground.
Next, in order to help distributed energy to reach its potential, I
think we need to focus on some of the barriers, and particularly the
more unreasonable barriers that are preventing implementing
distributed energy. Most important in this is interconnection. On
the subject of interconnection, I would just like to highlight one
piece of equipment I brought with me. This is a master control
module which we use to hook up our generators onto the grid.
This allows us to parallel with the grid and ensure that our energy
can come on and off safely onto the grid. It protects other users
that are downstream from the source of power. It also ensures that
workers are not injured if they are working on the lines when we
are generating power. This module meets the requirements of a
standard IEEE 1547. This standard was developed over 5 years by
a wide range of industry, regulatory, and utility participants. And
the Energy Policy Act that I mentioned, the amendment by
Congressmen Buyer and Boucher required that States at least
review IEEE 1547 to see how it could be deployed. Unfortunately,
States have been relatively slow to adopt the standard and in fact
have adopted them in a very inconsistent way. The result is that
many projects that could benefit from distributed energy do not get
done because of inconsistent rules, and oftentimes some utility
participants will require a roomful of relays and cabinets that might
be $10,000 or $20,000, instead of a $1,000 module that can
accomplish the same thing. And again, my recommendation is that
we try to come up with an interconnection standard that is
nationally consistent.
Lastly, I think that it would be wise for us to ensure that critical
infrastructure is protected throughout the United States. We know
that interruptions in the grid are possible and in fact even likely.
Hurricanes, grid failures like the Northeast blackout, and homeland
security threats have already demonstrated what can happen when
we lose grid power. I think Congress needs to review standby
requirements for key facilities and industries. Currently, there are
very few Federal standards. There are many, many facilities, of
course, that do have backup power in place, but too often managers
of critical infrastructure do not fund the purchase of backup
equipment, because it is much like buying insurance. You can
either pay the money now or you can hope nothing bad happens,
and if you are lucky, it won't. Unfortunately, when something bad
does happen, the public is the one who suffers from not having
power available. A few areas that I think deserve focus: petroleum
refinery and deliver sector, to ensure that there is adequate backup
power; water and sewage treatment, again, where we have seen
evidence of not having backup power; communication networks
and then emergency responders of all types. Reviewing these
requirements after emergencies is obviously too late, so we if act
proactively, we can ensure that our infrastructure is in place.
Again, I am pleased that you are having this hearing and I
thank you very much for the honor of testifying today.
[The prepared statement of Tom Linebarger follows:]
PREPARED STATEMENT OF TOM LINEBARGER, EXECUTIVE VICE
PRESIDENT AND PRESIDENT, POWER GENERATION BUSINESS,
CUMMINS, INC.
Introduction
Cummins Power Generation, a subsidiary of Cummins Inc., is
a global leader in the production and supply of power generation
equipment, with specific focus on increasing the availability and
reliability of environmentally responsible electric power around
the world. We deliver cost-effective power solutions for a wide
variety of customers - commercial and industrial businesses,
recreational users, emergency responders, government agencies,
utilities, and homeowners - through our global distribution
network.
Background
Distributed energy (DE) is electrical energy that is produced at
or near the site where the energy is consumed. DE is not one
technology - it can be produced by generator sets using
conventional fuels like diesel and natural gas and other newer fuels
like biomass, biodiesel, ethanol, or hydrogen. DE can also include
emergent technologies such as fuel cells, wind turbines or solar.
Installation of DE in the U.S. will result in far-reaching benefits to
consumers, businesses, industry and our national security.
Government policies must encourage greater use of DE.
Benefits of deployment of DE technologies
The benefits of DE are numerous. It is energy efficient, it
bolsters grid reliability, and provides backup power at the point of
use when the grid fails. DE is also environmentally sound. In
some situations it can also be a source of lower cost power. DE
protects some of our nation's critical infrastructure including water
and sewage treatment, emergency communications equipment, oil
refineries, nuclear power plants, financial data centers and much
more.
What is needed to fully reap benefits of DE
We believe there are four major policy areas that the
government should pursue to allow the country to reap the full
benefits of DE technologies: increased Federal R&D funding for
DE technologies; a review of backup power requirements for
critical infrastructure; tax policies that favor CHP; and national
uniform interconnection standards.
Mr. Chairman and Members of the Committee, thank you for
inviting me to testify. Today's topic is an important one and I am
glad to represent the distributed energy point of view. Today's
high fuel prices and energy security concerns highlight the
importance of looking beyond centrally-fired power plants for
solutions to meet our future electricity needs.
I am appearing here today in my capacity as President of
Cummins Power Generation. Cummins Power Generation, a
subsidiary of Cummins Inc. (NYSE: CMI), is a global leader in the
production and supply of power generation equipment, with
specific focus on increasing the availability and reliability of
environmentally responsible electric power around the world.
With over 80 years' experience, we deliver cost-effective power
solutions for a wide variety of customers - commercial and
industrial businesses, recreational users, emergency responders,
government agencies, utilities, and homeowners -- through our
global distribution network. Our products include engines,
alternators, generator sets, and systems including power control
and power transfer technologies. Our services range from system
design, project engineering and management, large scale
temporary power projects, and operation and maintenance
contracts. We also operate several small scale power plants
providing electrical power as well as hot or chilled water derived
from waste heat.
Distributed energy (DE) is electrical energy that is produced at
or near the site where the energy is consumed. DE is not one
technology - it can be produced by generator sets using diesel or
natural gas and increasingly other fuels like biomass, biodiesel,
ethanol, or hydrogen. DE can also include emergent technologies
such as fuel cells, wind turbines or solar. DE performs a number
of important roles for power consumers and utilities including:
emergency standby power to increase reliability, prime power
where power is unavailable, peaking power to reduce the load on
the grid at times of peak usage, the opportunity to utilize combined
heat and power to reduce their total energy costs, and as protection
against line or substation failure in a distribution grid.
It is estimated that there are approximately 160 gigawatts of
emergency standby power installed in the US. There are also
approximately 11 gigawatts of baseload distributed energy and
another 6.5 gigawatts of distributed energy being used to meet
utility peaking needs. It is also worth noting that in the US there
are approximately 30 gigawatts of combined heat and power plants
of less than 100 megawatts.
While these numbers are impressive, they are far short of the
potential opportunities for DE. In one market study at Cummins,
we estimated an additional market potential of 150 gigawatts for
combined heat and power (CHP) installations below 100
megawatts in the commercial and industrial sectors. We believe
the market opportunity is larger when you consider opportunities
to expand the use of other types of DE. It is worth noting that
favorable government policies in Europe have allowed DE
technologies to enjoy far greater success in the marketplace. DE
technologies account for approximately 13% of the electricity
generated in Europe, more than double their penetration in U.S.
markets.
The benefits of DE are numerous. It is energy efficient, it
bolsters grid reliability, and provides backup power at the point of
use when the grid fails. DE is also environmentally sound. In
some situations it can also be a source of lower cost power. DE
protects some of our nation's critical infrastructure including water
and sewage treatment, emergency communications equipment, oil
refineries, nuclear power plants, financial data centers and much
more.
During emergencies like last year's hurricanes or the Northeast
blackout of 2003, DE played a critical role in assuring first
responders could do their jobs and critical facilities like hospitals
continued to function. DE assured that communication systems
continued to operate and that critical information, such as the
financial data that underpins the banking system, was secure. It
kept businesses running and mitigated the economic impact of
these disasters. As a result of their investment in DE, many oil
refineries were also able to continue to operate, gasoline
distribution centers were able to load fuel into trucks, and gasoline
was made available to consumers. Unfortunately, not everyone
made such investments and there were interruptions in the fuel
delivery system.
I would like to highlight a few specific cases of how distributed
power provided critical support to Cummins customers during
Hurricane Katrina and the Northeast blackout.
When any major weather event is predicted for the US,
Cummins Power Generation and its distributors begin to prepare a
storm response. In the case of Hurricane Katrina our response
involved twice daily conference calls (every day for 9 weeks), to
organize the marshalling not only of generating assets, but
technicians, distribution equipment and fuel. To respond to the
national emergency, generating equipment was relocated from
around the country, and from Canada and Mexico. We estimate
we deployed in excess of 160MW to the region. Some of that
equipment remains in place today. We are proud of our ability to
mobilize generating equipment in this manner; however,
permanent DE installations would have provided better protection
for the region.
A hospital that did have emergency DE in place, is Turro
Infirmary in Kenner, LA. Turro Infirmary is one of the hospitals in
the New Orleans area that managed to keep operating during
Katrina on backup power. After the storm, the hospital recognized
the value of having sufficient and reliable emergency power and
has decided to upgrade its system by replacing generators that were
over 50 years old with new Cummins Power Generation units so
that it will continue to be well-prepared for the next emergency.
The communications industry has also realized the benefits of
reliable backup power. Verizon Wireless installed Cummins
generators at its cell towers and major switching stations in upstate
New York. During the blackout of 2003, while some people stood
in long lines at pay phones, these generators meant that Verizon
wireless customers continued to have uninterrupted wireless access
throughout the emergency.
Also during the blackout, Cummins generators enabled New
York Mayor Michael Bloomberg to respond to the blackout
because New York City Hall was supported by a Cummins
emergency standby system keeping the lights on, the computers
running and building systems operating. All airports have standby
generation to power air traffic control systems and runway
lighting, but at Newark Liberty Airport, a Cummins standby power
system provided uninterrupted power to the entire airport terminal
throughout the outage making travelers much more comfortable
with air conditioning and lighted bathrooms. Water systems and
sewage treatment facilities stopped working in Detroit, Cleveland
and several other cities in the affected area, but in Mississauga,
Ontario, outside of Toronto, a Cummins Power Generation prime
power system kept the sewage and water system operating for the
city's 800,000 residents.
Beyond emergencies, DE makes important contributions to
grid reliability. For example, each summer Cummins places 168
megawatts of power in the Northeast to help utilities meet their
seasonal peak. This is made up of two large projects, 72 megawatts
at FirstEnergy in New Jersey and 96 MW at Long Island Power
Authority.
At FirstEnergy our portable diesel generators are used to
provide reliability support to the grid. During peak periods the
generators are started, relieving constraints and lowering the
chance of a system failure. This past fall 40 of those units were
unhooked from the grid and moved to areas affected by the
hurricanes. These generators provided emergency power to
hospitals, like Forest General Hospital in Hattiesburg, MS; water
systems, like Veolia Water Works in Kenner, LA; and to support
FEMA operations. They were recently moved back to First
Energy to be in place to meet this summer's peaking requirements.
The 96 MW's of Cummins generating capacity on Long Island
provide reliability support to the local power grid to fill a gap
between electricity supply and demand until new transmission
capacity can be built to meet the needs of Long Island. Without
this support from DE, on peak days, Long Island would have a
serious electricity shortfall. Importantly, stringent emission
control standards were applied to this project. Each 2 MW
containerized generator is equipped with state-of-the-art emissions
control technology designed to meet New York Department of
Environmental Conservation's stringent air quality standards. The
emissions control technologies applied to this site, along with the
use of ultra-low sulfur fuel, resulted in more than 90% reduction in
nitrogen oxide, carbon monoxide and particulate matter. The
control package utilized on the generators reduces emission output
to levels that are better than EPA Tier III standards.
Additionally, DE makes important contributions in the area of
efficiency. Using DE in combined heat and power configurations
(CHP) leads to very high efficiencies by using heat normally
wasted in the electric generation process to do useful work, such as
heating, air conditioning or serving industrial processes. An
example of this benefit is a CHP system installed by Cummins at
American Honda's corporate headquarters in Torrance, California.
That project is saving the company 30% annually on its total
campus energy expenditures. In addition to the energy savings, the
CHP system allows American Honda to demonstrate corporate
leadership and environmental responsibility. As the ethanol
industry in the US continues to develop, it is looking increasingly
to install CHP plants to support its production facilities.
One of the areas that could most benefit from distributed power
technologies is utilizing landfill gas to generate electricity.
Cummins has installed a landfill gas to energy plant at the Viridor
Waste Management landfill in Dunbar, Scotland allowing a nearby
cement plant to obtain a significant portion of its power demand at
lower costs than can be supplied by the local utility. The Viridor
plant not only allows the cement plant to save on its energy costs,
but harnesses the methane gas produced by the landfill which when
flared into the atmosphere has about twenty times the greenhouse
effect of carbon dioxide. This project is also an example of how
favorable government policies can encourage deployment of these
highly efficient technologies. The project was eligible for
increased revenue in the form of Renewable Obligation
Certificates, a UK government trading program to encourage
development of renewable energy projects making the cost of
power from such sources more competitive. The Certificates allow
Viridor Waste Management to invest in the environmentally
friendly waste-to-energy project and supply cheaper electricity to
the cement plant and still make money on the project.
The benefits DE provides to our nation's energy infrastructure
are undeniable. Those benefits go beyond the individual benefits
received by the owners or users of the DE asset - but benefit all
Americans through enhanced reliability, efficiency, and critical
infrastructure protection. However, more often than not, Federal
and state policies treat DE as a burden to the electrical system
rather than a benefit. DE technology advancements are also
limited because of a lack of Federal research and development
funding. Further, connecting DE technology to the grid is difficult
because interconnection requirements are often inconsistent and
expensive to implement. In addition, tax policy does not favor
CHP as it does other clean efficient sources of electricity by giving
production tax credits for the benefits it provides.
The traditional drivers for DE are being magnified by current
global trends. Higher fuel costs, climate change initiatives and a
push for environmental stewardship, and homeland security
concerns all point to the use of increased use of DE to secure and
ensure the viability of continued energy supply into the future.
However, unless the US adopts policies that create a favorable
marketplace for DE, the technologies will continue to struggle and
much of the electricity generating capacity available in the US will
not be allowed to feed back on to the grid. I am concerned that, as
a result of less favorable policies toward DE, its adoption rate has
been slowed and this has been to the detriment of our power sector
and the security of our critical infrastructure.
What does DE need to reach its full potential? We believe
there are four policy areas that the government could adopt to
allow the country to reap the full benefits of DE technologies:
increased Federal R&D funding for DE technologies, a review of
backup power requirements for critical infrastructure, tax policies
that favor CHP, and national uniform interconnection standards.
Federal Funding for DE R&D
There are potential technological breakthroughs that could
have a significant effect on the efficiency, reliability and emissions
from generators that run on natural gas, biomass and similar fuels.
Federal funding to ensure that these technologies are developed
rapidly could have a major positive impact on fuel consumption
and emissions in the near or medium term. Federal funding,
particularly through the Department of Energy, also ensures that
the best research by all competitors in the field is brought together
to get results more quickly and to define how DE can contribute
most effectively to the grid.
Similarly, federally funded research on fuel cells for power
generation applications has already resulted in significant
breakthroughs on this important technology. However, significant
work remains to be done before this technology will be able to
meet the performance and cost targets required for it to have an
impact in our country.
With the progress that has been made to date, it is critical that
funding not be stopped mid-stream or we will lose the benefits we
have gained. These are technologies that can help us fulfill a
number of our critical priorities: low cost and reliable energy
infrastructure: diversifying our fuels to reduce dependence on any
single fuel; improving the security of our critical infrastructure;
using more renewable fuels; and improving the efficiency and
reducing the emissions of our power sources. Moreover, these
technologies can contribute to these goals in the near or medium
term rather than the distant future. We must continue our research
focus on DE.
Last year, this Committee worked to develop the Energy Policy
Act of 2005 (EPAct). That legislation authorized $730 million to
be spent on DE technology and policy development over the next
three years. Unfortunately, the Administration has not requested
funding at any where near that level for FY07. In FY 2006, DOE
allocated approximately $60 million for DE work. For FY 2007, it
requested only $30 million. As Congress finishes the FY07
Appropriations process it should provide additional funding for DE
research and development. Without full funding, progress on DE
will remain limited. Key programs may be ended short of their
goals and other programs will not begin at all.
One example of the type of work DOE is doing with respect to
DE is the Advanced Reciprocating Engine Systems (ARES)
program. Three engine manufacturers, including Cummins,
participate in this cost-shared program. The goal of the program is
to develop a cleaner, more efficient natural gas reciprocating
engine. These engines are workhorses of the industry, used in
nearly every DE application. While making these engines more
efficient doesn't sound as glamorous as technologies using
unconventional energy sources, if the goals of the ARES program
are achieved and our estimates of market demand are correct, there
will be a fuel saving of 491 trillion Btu's of natural gas, NOx
emissions will be reduced by 170,000 tons, and 26 million tons of
CO2 will not be emitted into the atmosphere over a ten year
period. To make this point another way, for every 10GW of ARES
products deployed, over 100 trillion Btu's of energy will be saved,
reducing oil consumption by 17.2 million barrels annually. We
think this is an important program and appreciate DOE's continued
support.
ARES is just one of the many programs industry and DOE are
working on to encourage advancement of DE technologies and
market penetration of those technologies. Other important DE
programs include the Gridwise Architecture Board, DOE Regional
Application Centers that promote CHP implementation, and
DOE's Landfill Methane Outreach and Coal Bed Methane
Outreach Programs that promote the useful and environmentally
friendly utilization of these waste energy sources nationwide.
Another area where there is work to be done to advance DE
technology is on microgrids. Microgrids are defined as single or
multiple clean distributed power resources serving multiple
customer loads (e.g., residential subdivision, mixed-use residential
and commercial centers, business and industrial parks).
Microgrids can provide cost savings and enhanced reliability to
consumers while simultaneously making the grid more robust to
outages caused by nature and security breaches. In the event of
such disasters, microgrids because of their capability to operate in
an "island mode" can help restore the power grid more rapidly.
Microgrid research and development has positioned the
concept for real world application. R&D is currently funded by
DOE and the California Energy Commission and is aimed at
studying the interaction of distributed resources with the grid,
performance of power electronics, and the seamless transitioning
of the microgrid when necessary between "island" and "normal" or
"parallel" operations with the utility grid. It is imperative that
funding for such programs be continued and expanded.
Internationally, Cummins Power Generation is working to
develop DE technology that uses a variety of readily-available
biofuels. In India, Cummins is working with the Indian Institute of
Science on technologies that use wood chips, rice husks and
coconut shells, among others things, to generate electricity in a
distributed form. We are using this technology to support rural
electrification in India. These small scale systems (20-40KW)
power entire villages providing new economic opportunities to
areas that would otherwise be unserved by the grid. Globally,
biofuels are becoming an increasingly important source of
feedstock for power generation. Increased use of these fuels will
help dampen growing worldwide demand for petroleum. These
international programs highlight the additional research that is
necessary to enable DE power generation to fully realize the
benefits of biofuels.
Critical Infrastructure Backup Power Requirements
Congress should consider expanding the role that DE
technologies play in assuring our homeland security and in disaster
relief and recovery. Last year's hurricanes highlighted the fragility
of our fuel delivery system. With much of our oil production and
refining in the Gulf Coast, the impact of a power outage to these
key facilities can have ramifications well beyond the region;
causing fuel supply disruptions in other parts of the country. In
recognition of this vulnerability, Homeland Security Secretary
Chertoff and Energy Secretary Bodman recently sent a letter to the
oil refining and distribution industry asking them to review their
current backup generation capabilities and needs and to enhance
them if necessary. Other industries are equally vulnerable to
power supply interruptions. In an example close to home, lack of
backup power meant Fairfax County residents had to boil water
after power was knocked out to the local water system after
Hurricane Isabel hit the east coast -- even well after power
restored. Cleveland residents faced a similar problem after the
Northeast blackout of 2003.
Congress, the Administration and the States should review
existing backup power requirements in light of today's changing
requirements and then implement new requirements where there
are gaps. We believe Congress should begin to develop a power
security policy. Such a policy should include a review of current
backup power capabilities for critical facilities, and authorization
for DHS and/or DOE to require key industry sectors to have
sufficient backup power available.
Tax Incentives
We believe tax policies should be adopted to encourage DE,
and CHP in particular. Specifically, because distributed energy,
when used in a CHP application, has significant environmental and
efficiency benefits, its deployment should be encouraged. CHP
systems have an overall energy efficiency level of 85%. Compare
this with an average of 34% for central power stations. One way to
encourage CHP is through a tax credit and faster depreciation.
Market penetration of combined heat and power systems would
increase dramatically with such a credit. This type of tax credit
was critical to the development of the wind industry in the US. We
believe a similar credit would have a beneficial impact on the
development of new CHP projects. During consideration of
EPAct, production tax credits for CHP were considered but
ultimately removed during conference. We believe Congress
should reconsider adoption of CHP tax credits.
Uniform Interconnection Standards
In EPAct, Congress passed legislation to require States to
develop their own interconnection rules. This was a major step.
Prior to the legislation many states had no interconnection
requirements at all. As a result of the legislation, states are
beginning to develop interconnection processes, but there is still a
great deal of variation from state to state and utility to utility.
Importantly, many of the safety and technical questions about
interconnection have already been resolved through an industry
driven process conducted by the Institute of Electrical and
Electronics Engineers (IEEE). IEEE 1547 is a technical standard
for interconnection developed through a consensus process that
included utilities, DE equipment manufacturers, end-users, and
state and regional regulators.
We believe Congress needs to take another step on the
development of uniform interconnection standards. Because each
state has not adopted IEEE 1547 as written, there remains
inconsistency in the interconnection process with which those
seeking to install DE projects must comply. DE project developers
are often met with requests for unnecessary protective equipment
or unreasonable commercial terms that can make an otherwise
good project uneconomic. Further, a consistent standard would
speed the interconnection process and lower the costs of DE
equipment by allowing manufacturers to develop pre-certified
interconnection equipment. We believe Congress should require
the development of a national uniform interconnection standard for
small generators, which would include the adoption the IEEE
standard.
Mr. Chairman, I thank you for holding this hearing. I think it is
important for the nation that you fully consider the benefits of DE
and adopt policies to encourage its continued development and
deployment. Again, I thank you for this opportunity to testify.
MR. HALL. Mr. Linebarger, thank you. Dr. Katzer.
MR. KATZER. Thank you, Mr. Chairman and members of the
committee. Good afternoon. My name is James Katzer and as the
Chairman noted earlier, I am a Visiting Scholar at the Laboratory
for Energy and the Environment at MIT, focusing on the future of
coal. I am pleased to be able to testify to you today about the
aspects of coal-based power generation. I will focus on generation
technology and associated emissions, including carbon dioxide
emissions. My formal testimony has been submitted for the
record.
Coal presents significant challenges in large-scale power
generation. At the same time, the United States has 27 percent of
the total global recoverable coal reserves, enough for 250 years at
current consumption, as was noted earlier. Over 50 percent of U.S.
electricity was generated from coal last year and coal is expected
to shoulder its share of the demand growth in the future.
A primary coal-generating technology is pulverized coal
combustion, PC combustion. It is a well-established, mature
technology, generating efficiency increases from about 35 percent
for low-severity, subcritical units to about 44 percent for high-
severity, ultra-supercritical units. This efficiency increase reduces
the coal required per unit of electricity generated by about 25
percent. This also means that CO2 emissions are reduced by 25
percent and other emissions produced are also decreased by about
25 percent per unit of electricity generated.
Most PC plants in the United States are subcritical units, the
bottom of this range. We have no ultra-supercritical plants. On
the other hand, Europe and Japan have built almost a dozen ultra-
supercritical plants over the past decade. We need to have higher
efficiency technology available for our changing future, and I will
comment on this if I have some time at the end. Application of
advanced emissions control technology to PC units can reduce PC
emissions to very low levels. Further, emissions control
technology is continuing to evolve and improve, and at this point
we do not know just when or where the end will be reached. I
would say, in general, the issue of PC emissions is not technology
capability, but breadth of its application.
Stepping on, integrated gasification combined cycle, IGCC,
technology is a competitor to PC generation. Four coal-based
IGCC demonstrations plants, each between 250 and 300
megawatts, have been built, each with government assistance, and
each is operating well. Two of these are in the United States. In
addition, there are about five refinery-based IGCC units, three of
them at the 500 megawatt level each, that are gasified petroleum
coke, residua, tars, asphalts, and other residues in refineries to
produce electricity. IGCC is well established commercially in the
refinery setting. IGCC should also be considered a commercial
technology in the electricity generating setting, but in this setting it
is neither well established nor mature. As such, it is likely to
undergo significant change as it matures.
The estimated cost of electricity for PC generation or
bituminous coal is about 4.8 cents per kilowatt hour. Under
similar conditions, an IGCC plant produces electricity for about
5.1 cents a kilowatt hour, or about three-tenths of a kilowatt hour
more than the PC unit; thus, today IGCC is not the economic
choice. For supercritical PC generation, about 1 cent per kilowatt
hour, or about 20 percent of the total, is associated with achieving
high levels of emissions control. Reducing emissions control by a
factor of two further, well beyond or well below any permitted
levels that are being set today in the United States, increases the
costs an estimated two-tenths of a cent per kilowatt hour, further
raising that about 5 cents a kilowatt hour for PC. These added
emissions costs narrow the gap for IGCC, but do not produce a
shift in technology choice based on COE. However, IGCC has a
potential for order of magnitude criteria emissions reductions
below PC for 99.5-plus levels of mercury and other toxic metals
reductions, for much lower water use and stabilize solid waste.
MR. HALL. Begin to wind up, please.
MR. KATZER. Yes. These may become a larger factor in the
future and may begin to shift the balance toward IGCC. My
testimony contains details on CO2 capture.
The conclusion I would like to come out of this with is, when
we look at all of this and the role of low rank coals in the United
States, we conclude that among IGCC, oxygen-fired combustion,
and air-fired combustion, the three competing technologies, at this
point, each is in a developing stage, they each have a lot of
maturity to gain, and it is too early to conclude winners and losers
at this point in the game. The challenges to meet our power needs
and protect air quality and the environment are substantial, but
coal, teamed with the proper technology, can be part of the
solution. I thank you.
[The prepared statement of James Katzer follows:]
PREPARED STATEMENT OF DR. JAMES KATZER, VISITING SCHOLAR,
LABORATORY FOR ENERGY AND THE ENVIRONMENT,
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
Mr. Chairman and Members of the Subcommittee. Good
morning. My name is James Katzer, and I am a Visiting Scholar in
the Laboratory for Energy and the Environment of Massachusetts
Institute of Technology. For about the last year, I have been
working with a group of MIT faculty who have been looking at the
future of coal. I am pleased to have been invited to discuss some
key aspects related to this work with you today. I will focus on
coal-based generation technology and certain associated
environmental issues, including carbon dioxide emissions and their
control. I am submitting my written testimony herewith.
Coal presents the ideal paradox in power generation. On one
hand, it is cheap, abundant, and concentrated typically in countries
with large human populations and limited oil and gas. On the
other hand, its use can have significant environmental impacts,
requires capital-intensive generating plants, and produces large
quantities of carbon dioxide. Both U.S. and global electricity
demand will continue to grow at a brisk rate, and coal is certain to
play a major role in meeting this demand growth. As you are
aware the U.S. has 27% of the total global recoverable coal
reserves, enough for about 250 years at current consumption. Over
50% of U.S. electricity was generated from coal last year.
The primary technology used to generate this electricity is
pulverized coal (PC) combustion. It is well-established, mature
technology that generates most of the world's coal-based
electricity. Although the efficiency of generation depends on a
number of variables, including coal type and properties, plant
location, etc., the most important efficiency determinant is the
temperature and pressure of the steam cycle that is used. I will
come back to this in a minute.
Integrated Gasification Combined Cycle (IGCC) is a
competitor to PC generation. Four coal-based IGCC
demonstration plants, each between 250 and 300 MWe, have been
built, each with government assistance, and are operating well. In
addition, there are about 5 refinery-based IGCC units, three at 500
MWe each, that are gasifying petroleum coke, or refinery asphalt,
residua, tars, and other residues to produce electricity. These units
often also produce steam and hydrogen for the refinery. IGCC is
well established commercially in the refinery setting. IGCC can
also be considered commercial in the coal-based electricity
generation setting, but in this setting it is neither well established
nor mature. As such, it is likely to undergo significant change as it
matures. Currently, the biggest concern with coal-based IGCC is
gasifier availability.
Because a large number of variables, including coal type and
quality, location, etc, affect generating technology choice,
operation, and cost, my comments here and my technology
comparisons will center one point set of conditions. This includes
one coal, Illinois #6 coal, a high-sulfur bituminous coal and
generating plants designed to achieve criteria emissions levels
somewhat lower than the lowest recent permitted plant levels. For
example, the designs that I refer to here achieve 99.4 % sulfur
removal. I will first compare these technologies without carbon
dioxide capture and then compare them with 90% carbon dioxide
capture. Plant capital costs are based on recent detailed design
studies and industrial experience of the last 6 years, which
represented a relatively stable period. I have not attempted to
account for recent cost escalation. Here I will focus on
technologies that are either commercial or well on their way to
becoming commercial.
PC Combustion: The most important variations affecting PC
generating efficiency is the severity of steam cycle operation:
subcritical, supercritical, and ulta-supercritical. Generating
efficiency is about 35% for subcritical generation, about 38% for
supercritical generation, and about 44% for ultra-supercritical
generation. Increased generating efficiency means less emissions
per unit of electricity, including less CO2 emissions. In moving
from subcritical to ultra-supercritical generation, the coal required
per unit electricity is reduced by about 22%, which means a 22%
reduction in CO2 emissions and also reduced criteria emissions.
Moving from subcritical to supercritical offers about a 10%
reduction. Most PC plants in the U.S. are subcritical units. We
have no ultra-supercritical plants in operation, under construction,
or being planned. One reason is that low coal cost has not
provided sufficient economic incentive to offset the slightly higher
capital costs associated with higher steam cycle operating severity.
On the other hand, Europe and Japan, which have higher coal costs
and stronger culture supporting high efficiency, have built almost a
dozen ultra-supercitical units over the last decade. These units are
operating as well as subcritical units, but with much higher
generating efficiency. The key enabling technology here is
improved materials to allow operation at higher severity
conditions. An expanded U.S. program to advance materials
development and particularly improved fabrication and repair
technologies for these materials would advance the potential for
increased PC generating efficiency for our changing future.
Another critical issue with PC generation is criteria and other
emissions. Application of advanced emissions control
technologies to PC units can result in extremely low emissions,
and emissions control technology continues to improve, including
the potential for high degrees of mercury control. In general, the
issue of PC emissions is not a question of technology capability
but the breadth of its application. This may not hold for specific
local situations.
Using detail design study capital costs, EPRI economic TAG
guidelines and assumptions and coal at $1.50 per million Btu, the
estimated cost of electricity (COE) for a subcritical PC is about 4.8
�/kWe-h, consistent with recent EPRI estimates [1]. The COE
decreases slightly (~0.1 �/kWe-h) from subcritical to ultra-
supercritical generation. For supercritical generation almost 1
�/kWe-h, or about 20%, is associated with achieving emissions
control to the high design levels assumed here. Reducing
emissions by a factor of two further would add an estimated 0.2
�/kWe-h increasing the COE to about 5.0 �/kWe-h.
IGCC: The promise of IGCC has been high generating
efficiency and extremely low emissions. There are a number of
critical options associated with gasification technology and its
integration into the total plant that affect efficiency and operability.
Of these, the gasifier type and configuration are the most
important. Table 1 summarizes the characteristics of gasifier types.
Entrained-flow gasifiers, which are extremely flexible, are the
basis of each of the IGCC demonstration units. Figure 1 shows the
configuration of an IGCC employing full quench cooling of the
gasifier exit gases. This configuration will produce about 35-36 %
generating efficiency. Figure 2 illustrates the addition of a radiant
syngas cooler to raise steam for the steam turbine, which increases
the electricity output and raises the generating efficiency to 38-39
%. Adding convective syngas coolers to recover additional heat as
steam is also shown in Figure 2. It can increase the generating
efficiency to the 39-40 % range. Existing IGCC demonstration
units, which employ different practical combinations of these
options, operate at generating efficiencies from 35.5 % (Polk) to
40.5 % (HHV) (Puertolanno Spain). Since IGCC is not yet mature,
there is still potential for efficiency gain. However, I do not expect
to see commercial IGCC generating efficiency exceeding that of
ultra-supercritical PC in the intermediate time frame. The
design/engineering firms and the power industry need to gain
experience with IGCC to develop better designs and achieve
improved, more reliable operation.
Current coal-based IGCC units are permitted for and are
operating at the same criteria emissions levels as the best PC units.
An IGCC plant with radiant and convective syngas coolers using
Illinois #6 coal, operating at 38% efficiency, and achieving high
levels of criteria emissions control produces electricity for about
5.1 �/kWe-h or about 0.3 �/kWe-h higher than a supercritical PC
[1, 2]. IGCC would not be the choice based on COE alone,
independent of gasifier availability concerns. Requiring high
levels of mercury removal, reducing criteria pollutants by one half
from the very low levels that we are already considering and
including the cost of emissions credits and offsets increases the
COE for the PC, narrowing the gap, but does not suggest a shift in
technology choice based on COE. However, IGCC has the
potential for order-of-magnitude criteria emissions reductions,
99.5+ % levels of mercury and other toxic metals removal, much
lower water consumption, and highly stabilized solid waste
production. These may become a larger factor in the future. To
achieve these order-of-magnitude criteria emissions reductions is
expected to increase IGCC COE, but this increase is not expected
to be large. Companies considering construction of a new coal-
based generating facility need to bring all these considerations into
their forward pricing scenarios to help frame the decision of which
technology to build.
CO2 Capture: If it becomes commercial practice, CO2 capture
will add significantly to the COE, independent of which approach
is taken. CO2 capture could also change the choice of technology
in favor of IGCC, although it is too early in technology
development to declare this a foregone conclusion. History
teaches us that one single technology is almost never the winner in
every situation. The options are:
? Capture the CO2 from PC unit flue gas. In this case, the
CO2 is at a low concentration and very low partial pressure
because of the large amount of nitrogen from the
combustion air. To capture and recover the CO2 using
today's amine (MEA) technology requires a lot of energy.
Energy is also required to compress the CO2 to a
supercritical liquid. This large energy consumption reduces
plant electricity output by almost 25% and reduces
generating efficiency by about 9 percentage points. The
added capital and the efficiency reduction increase the COE
by about 60% or about 3.0 �/kWe-h to about 7.7 �/kWe-h.
In this situation a 50% reduction in the CO2 capture and
recovery energy would have a significant impact on PC
capture economics. Focused research on this issue is
clearly warranted.
? Combust coal with oxygen( Oxy-fuel combustion) to
reduce the amount of nitrogen in the flue gas. This allows
the flue gas to be compressed directly liquefying the CO2
without a costly separation step first, significantly reducing
the energy consumption. The technology required the
addition of an air separation unit which consumes
significant energy and thus would not be used except for
CO2 capture. This technology is in early development
stage, is advancing well, and at this point appears to hold
significant potential for both new-build capture plants and
for the retrofitting existing PC plants. The estimated COE
for oxy-fuel combustion is about 7.0 �/kWe-h (includes
capture and compression to supercritical liquid, but not
transport of sequestration) or about 0.7 �/kWe-h less than
for air-blown PC combustion with capture. The technology
requires further development and demonstration along with
detailed design studies to allow effective evaluation of its
cost and commercial potential.
? Use IGCC, shift the syngas to hydrogen, and capture the
CO2 before combustion in the gas turbine. IGCC should
give the lowest COE increase for CO2 capture because the
CO2 is at high concentration and high partial pressure, and
this is what is observed. The needed technology is all
commercial, although it has never been fully integrated on
the scale that it will need to be applied here. The estimated
COE is 6.5 �/kWe-h [1] which is a 1.4 �/kWe-h increase
over non-capture IGCC and is about about 1.2 �/kWe-h less
than supercritical PC with capture. Oxy-fuel combustion
falls in between them
Lower Rank Coals: As Figure 3 shows, moving from
bituminous coal to sub-bituminous coal and to lignite results in an
increase in the capital cost for a PC plant and a decrease the
generating efficiency (increased heat rate). However, for IGCC,
these trends are much larger, such that currently demonstrated
IGCC technologies become more substantially disadvantaged
relative to PC for subbituminous coals and lignite. Note that over
half of the U.S. recoverable coal reserve is either subbituminous
coal or lignite. Thus, there is a substantial need for improved
IGCC technology performance on lignite, other low rank coals,
and biomass. Options include, but are not limited to, improved
dry-feed injection into the gasifier, coal drying, fluid transport
reactors and other gasifier configurations. Development should be
at the PDU scale before moving to demonstration.
A variation on PC combustion is fluid-bed combustion in
which coal is burned with air in a fluid bed, typically a circulating
fluid bed (CFB)[2, 3] CFBs are best suited to low-cost waste fuels
and low-rank coals. Crushed coal and limestone are fed into the
bed, where the limestone undergoes calcination to produce lime
(CaO) which captures sulfur. The steam cycle and generating
efficiencies are similar to PC. The primary advantage of CFB
technology is its capability to capture SO2 in the bed, and its
flexibility to a wide range of coal properties, including low-rank
coals, high-ash coals and low-volatile coals. The technology is
fully commercial, and several large new lignite-burning CFB units
have been constructed recently. CFBs are well suited to co-firing
biomass [4].
When CO2 capture is considered, the differences among IGCC,
oxy-fuel PC and air-blown PC become significantly less than
discussed above for bituminous coal.. In this situation all three of
the technologies with CO2 capture must be considered to be in the
early stages of development, and it is simply too early to select one
of these technologies as the winner vs. the others
Key Findings:
? PC technology, although mature, still offers opportunities
for improved efficiency and thus reduced coal consumption
and CO2 emission per unit of electricity generated. Higher
efficiency generation is important without CO2 capture but
also makes CO2 capture less costly. An expanded program
to develop and apply new materials for more severe steam
cycle operation is warranted.
? PC emissions control technology has become very effective
in reducing criteria emissions, but it continues to expand its
capabilities. The limit of the technology has not yet been
reached although increases in extent of required removal
and addition of new requirements continue to increase the
PC COE.
? IGCC is commercially demonstrated technology that is not
yet mature in the power generation arena, although it is
mature in the refinery arena. With coal its main challenges
are gasifier availability and COE. It has the potential of a
much smaller environmental footprint than PC technology
and of markedly lower air emissions. In the near term,
these advantages do not drive a change in generating
technology.
? Current commercial IGCC technology is not well suited for
lower rank coals, of which the U.S. has a large amount. To
expand its potential scope to these coals, IGCC technology
needs to undergo further targeted development.
? The technology systems required to capture CO2 from coal-
based power production are in the early stages of
development. Of the three competing systems ( PC with
CO2 recovery from flue gas, Oxy-fuel combustion with flue
gas direct compression to liquefy CO2, and IGCC with pre-
combustion CO2 capture) it is too early to choose winners
because it is not possible to predict how technology
development and commercial innovation may evolve.
Further, one technology system may be well suited for
bituminous coals, whereas another may apply best to low
rank coals and lignite..
Citations and Notes
1. Dalton, S., The Future of Coal Generation, in EEI Energy
Supply Executive Advisory Committee. 2004.
2. NCC, Opportunities to Expedite the Construction of New Coal-
Based Power Plants. 2004, National Coal Council.
3. Beer, J.M. The Fluidized Combustion of Coal. in XVIth
Symposium (Int'l) on Combustion. 1976. MIT, Cambridge: The
Combustion Institute, Pittsburgh.
4. Combustion-Engineering. Fluid Bed Combusiotn Technoloogy
for Lignite. 2005
Table 1. Characteristics of different gasifier types
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Figure 1. IGCC Plant with Entrained Flow (GE) Full Quench
Gasifier
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Figure 2. Heat Recovery Options for Entrained-Flow Gasifier
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Figure 3 Effect of Coal Type (Rank) on Capital Cost and Heat
Rate for PC and IGCC
MR. HALL. I thank you and I found it very interesting and have
some questions for you about it. Mr. Cresci.
MR. CRESCI. Thank you, Mr. Chairman. Good afternoon to
you and the members of the subcommittee. I am Joe Cresci,
Chairman of the Environmental Power Corporation. Thank you
for inviting us to be here today.
You have already heard a good deal today about the
importance of renewable energy and the value of the various
programs that support and encourage renewables. Therefore, I will
focus today on our subsidiary, known as Microgy, which is a
renewable energy source that most people know much less about
than some of the others. Microgy develops biogas systems which
are very efficient at extracting methane-rich biogas from a
combination of livestock manure and other organic and food
industry wastes. Inside Environmental Power, we refer to our
biogas as RNG, renewable natural gas. Our RNG is used to
produce green electric power, thermal energy, or it can be refined
to pipeline grade methane.
To date, we have completed or announced projects in
Wisconsin, California, Texas, and Nebraska. Microgy, along with
our Danish licensor, have significantly improved conventional
anaerobic digestion technology, thereby enabling us to generate
RNG at volumes and cost, which are commercially attractive.
Though the SEC rules in competitive considerations do not permit
us to discuss a lot about cost and pricing matters, I can say that we
believe our renewable natural gas can be delivered to the pipeline
at competitive prices with those projected for imported LNG. At
the same time, our technology and manure handling process have
also significantly reduced greenhouse emissions, improved water
quality, and dramatically reduced odors around animal operations.
Take notice of the samples of the post-digestive material coming
from one of our Wisconsin projects and I think you will be
surprised by it.
Our newest and largest projects to date are in Texas and we
will produce pipeline grade RNG. One is a 10,000 cow system in
construction is at Huckabay Ridge in Stephenville and another
soon to enter construction at the Mission Dairy in Hereford, Texas.
These represent a major technology upgrade and a significant
financial step forward for us, moving our systems from small local
operations to systems capable of providing RNG at volumes
equivalent to a good natural gas well. Ours, however, is a gas well
that needs no depletion allowance as long as we have cows and
other waste being generated. At the Mission Dairy project, there
are 24,000 cows permitted for the site. In addition, there are tens
of thousands of animals within a 10-mile radius of that site,
including both dairy and feedlot cattle. Each 10,000 cows
represents another potential well site, so to speak.
With regard to the scale of the market as a whole, we estimate
that there are more than 150 Huckabay size projects, including
more than 1,000 individual tanks which would produce in excess
of 81 trillion cubic feet of renewable natural gas annually. If you
add the meat processors, swine farmers, and others, we could add
the equivalent of 400 to 500 natural gas wells that produce a
renewable natural gas with no depletion.
Let me conclude with comments on ethanol in our technology.
Ethanol and our system are complementary technologies, not
competitors. One of our EPC digesters in Wisconsin is already
partially fueled by by-products of the ethanol production process.
This increases both the efficiency in the production of ethanol and
reduces the ethanol production waste. EPC digesters, more
importantly, can supply ethanol producers with RNG on site,
thereby reducing reliance on conventional natural gas and on
imports of LNG and in some situations, even the infrastructure
needed for natural gas transport.
Natural gas now costs about $7 a million BTUs and it takes
approximately 33,000 BTUs of natural gas to manufacture one
gallon of ethanol, costing, at today's market, about 23 cents for
every gallon of ethanol they make. By providing readily available
RNG for ethanol producers, we can offer a crucial element that
will facilitate expansion of ethanol production.
What are our challenges? The lack of commercial credit and
limitations on our own capital financing capabilities mean that the
development of our biogas technology will be significantly slowed
if the public portion of the public/private partnership, such as Title
XVII of the Energy Policy Act of 2005, is unavailable to bridge the
gap. Further, our production of RNG is not included in any of the
numerous incentive programs available to all other alternative
energy producers.
As I wrap up, Mr. Chairman, let me say that this committee
structured the loan guarantee program in Title XVII very well.
Unfortunately, what we last heard was that the guidelines are still
at OMB, and the Department of Energy has informed us that
renewable natural gas from manure and food waste is currently not
a high priority for them. We at EPC are advancing with the
support of accommodative equity markets by picking the low
hanging fruit in this business. Our RNG initiatives could move
forward much more quickly with a private/public partnership, with
participation at simple parity, and incentive programs that are
available to other renewable energy producers. RNG development
would benefit from a level playing field and from the
implementation of Title XVII.
I thank this committee for their time and attention, and I would
welcome you to visit facilities around the country, particularly in
Texas, where this fall we plan to start delivering RNG to the
pipeline. I would be pleased to take your questions. But first, I
would request of this committee that we might submit minor
revisions to our written testimony, which has already been filed. It
was prepared on very short notice, and we have a few little things
we would like to clean up, if you don't mind.
[The prepared statement of Joe Cresci follows:]
PREPARED STATEMENT OF JOE CRESCI, CHAIRMAN,
ENVIRONMENTAL POWER CORPORATION
The focus of my comments is on one of our subsidiaries,
Microgy, Inc., headquartered in Golden, Colorado. We have
significantly improved conventional anaerobic digestion
technology, enabling us to generate more methane-rich biogas than
earlier technologies, thus making agricultural waste-to-energy
projects more feasible. In our own company, we have begun to
refer to our biogas as RNG---Renewable Natural Gas.
Though SEC regulations and competitive considerations do not
permit me to discuss pricing issues, I am allowed to say that we
believe our RNG can be competitively priced as compared to
projected prices for imported LNG. At the same time, our
technology and manure handling process also significantly reduces
greenhouse emissions, improves water quality, and dramatically
reduces odors around animal operations.
EPC's future has a place in the fuels world as well. There is
potential for LNG production as a conventional fuel substitute. But
perhaps one of the most important areas of potential expansion for
EPC, and I know it is an important area for this committee, is that
our EPC digesters can be fueled with the byproducts of ethanol
production, increasing both efficiency in the production of ethanol
and reducing the wastes.
Ethanol and anaerobic digestion are complementary
technologies, not competitors. Ethanol is a liquid fuel source,
appropriate for gasoline blending and targeted at the automotive
market. Biogas, on the other hand, is more appropriate for onsite
use in heating, electricity generation, and industrial processes, or as
a source of RNG for delivery via conventional natural gas
pipelines.
Our challenges? The lack of commercial credit and the
limitations on our capital financing capability, means that the
development of this biogas technology will be significantly slowed
if the public portion of the public/private partnership is unavailable
to "bridge the gap" until competitively priced commercial
financing becomes available.
We continue to be hopeful that the Title XVII loan guarantees
of the Energy Policy Act of 2006 would help expedite this exciting
partnership with our livestock and food processing partners and
with our future ethanol operators.
With some help with the "D" in "R&D" to more rapidly
expand this efficient technology," we could move even more
quickly through the first integration of our multi digester systems,
which can be used for on-site, dependable systems for agricultural
and ethanol operations, for sale of renewable gas into the existing
pipeline system, and for future expansion to LNG applications.
Good Morning, Mr. Chairman. I am Joe Cresci, the Chairman
of the Board of Environmental Power Corporation. EPC was
founded in 1982. We are headquartered in Portsmouth, New
Hampshire. Environmental Power has developed generating
facilities powered by nonconventional fuels and renewable energy
sources, including hydro-electric and waste coal-fired generation.
The focus of my comments this morning is our subsidiary,
Microgy, Inc., headquartered in Golden, Colorado. Microgy
develops biogas systems, which are very efficient at extracting
methane-rich biogas from a combination of livestock manure and
other organic and food industry wastes. Inside Environmental
Power, we refer to our biogas as RNG - Renewable Natural Gas.
Our RNG is used to produce "green" electric power, thermal
energy, or refined to pipeline-grade methane. Microgy's biogas
production system processes waste from livestock manure mixed
with other organic wastes ranging from ethanol production by-
products to multiple varieties of waste from the food industry. We
have completed or announced anticipated installations for projects
in Wisconsin, California, Texas, and Nebraska.
Microgy, along with our Danish licensor, has significantly
improved conventional anaerobic digestion technology, enabling
us to generate RNG at volumes and costs that is commercially
attractive.
Although SEC regulations and competitive considerations do
not permit me to discuss cost and pricing matters in detail, I can
say that we believe our RNG will be competitively priced
compared to projected prices for LNG imports. At the same time,
our technology and manure handling processes also significantly
reduce greenhouse emissions, improve water quality, and
dramatically reduce odors around animal operations.
Microgy's system operates in the thermophilic temperature
range, which provides faster, more complete digestion and
accelerates composting, dramatically reducing BOD (biological
oxygen demand) and virtually eliminating pathogens, while also
providing more energy and a better by-product material. The
residual product resulting from this process, of which I've brought
a sample for you today, makes an animal bedding material, which
is preferred by our customers because it doesn't carry the potential
bacteria and pathogens of other products. As you'll note it looks a
bit like peat moss, with only a slight earthy odor and a soft texture.
Our steel tanks, which resemble farm silos, and our piping are
built to last, as are the high-tech monitoring and control systems.
We build, own, and operate our energy systems so farmers can
farm, while we produce continuous energy output, 24 hours a day,
7 days a week.
Why is Microgy's system so efficient? We have the exclusive,
perpetual U.S. license to a European technology that has operated
for over 15 years in small applications and is now being adapted by
Microgy for the traditionally larger U.S. farms with a broader
diversity of manure quality. We believe that, until now, there has
been no commercial precedent to our systems in scale and
efficiency. We can produce pipeline-quality RNG and other
"mainstream" energy outputs that are marketable in conventional
energy markets.
At the same time, our operations provide significant
greenhouse gas reduction. Our digesters capture the methane
which is a 21 times more powerful greenhouse gas than CO2,
which would otherwise be given off by the breakdown of manure,
equaling an approximately 95% reduction in net greenhouse
emissions to the atmosphere. We believe that our large multi-
digester projects could generate 30-60,000 tons of CO2 equivalent
emission offsets annually.
Our systems provide a number of other environmental benefits.
They substantially diminish odor from waste at animal feeding
operations. Manure run-off on farms is currently one of the leading
water pollution challenges. Our process accelerates the natural,
existing composting rate. Since we handle the waste anyway, we
can more easily direct it to organic fertilizer/compost markets or
divert it for appropriate alternative disposal. Our high temperatures
remove pathogens such as e'coli O157:H7 and our scrubbers
remove toxic gases such as hydrogen sulfide.
Our initial projects, funded with EPC capital, have
demonstrated the effectiveness of our technology, and the models
are scaled to provide significant cost and productivity
enhancements.
Our first U.S. installation, which established the commercial
scale and viability of our process, is at the Five Star Dairy in Elk
Mound, Wisconsin, and has been operational since June of 2005.
That first anaerobic digester system is one 750,000 gallon tank
processing waste from 900 milking cows. That is on the high side
of a typical size dairy farm in the north-central part of the United
States. That system produces approximately 775 KW of renewable
energy, the equivalent of electricity for about 600 homes. The
biogas produced by this installation is sold wholesale by Five Star
to Dairyland Power Cooperative, which owns the generator.
The Five Star Dairy project produces about 4 to 5 times as
much methane as conventional anaerobic digesters, such as the
prevalent plug flow systems and the prevailing lagoon waste
systems. Five Star sells biogas for Dairyland's use in renewable
distributed electric generation, capturing an estimated 2,600
tons/year of greenhouse gases, and providing improved, no-cost
bedding for dairy cows.
We are in the final permitting stages for a project at the Joseph
Gallo Farms in Atwater, California. Two digester tanks for the
manure from 3,000 milk cows are projected to generate 130 billion
BTU's of energy per year, the equivalent of heating 2,200 homes.
This closed-loop methane recovery from the farm itself is expected
to replace 1.4 million gallons of purchased propane used in dairy
and cheese-making processes. Construction of this project, too, is
likely to be funded by EPC, because no credit is available, thus far.
We estimate 8,000 tons of CO2 greenhouse emission offsets from
the Gallo project.
Our next projects, in construction at Huckabay Ridge in
Stephenville, Texas, and soon to enter construction at Mission
Dairy in Hereford, Texas, represent a major technology upgrade
and a major financial step out, moving our systems from small,
local operations, to systems capable of providing the equivalent
gas of a nice sized natural gas well. It is, however, a gas well
which needs no depletion allowance, as long as we have cows and
other wastes.
Huckabay Ridge at Stephenville has a plan for eight 916,000
gallon digester tanks for 10,000 milk cows. (The rule of thumb is
one digester for roughly 1,000 cows.) In what we believe is a first
for biogas, we will be constructing a scrubber plant (not a new
technology, but a new use for integration in a biogas system) to
provide pipeline quality gas that can be delivered to the nearby
existing pipeline grid. A modest estimate is that we will be able to
deliver 650,000 MCF of pipeline-grade gas annually, the
equivalent needs for 11,000 homes or the equivalent of 12,700
gallons a day of heating oil. As previously stated, that is equivalent
to a good size natural gas well. I might add there are a total of
30,000 cows near the Huckabay Ridge project.
At the Mission Dairy project recently announced in Hereford,
Texas, there are 24,000 cows permitted for the site. However, there
are tens of thousands of animals within a ten-mile radius of that
site, including dairy and feedlot cows. Each 10,000 cows is another
potential "well" site, so to speak.
We conservatively estimate that we will be able to deliver at
Mission Dairy our first application of a modular
design/construction program, where we perfect not only economies
of scale, but the beginnings of a replicable modular system. The
component producers can then produce "models," rather than
"one-offs," and we can then replicate standardized core designs.
The models would be envisioned to be available in modules of four
tanks.
With regard to the scale of the market as a whole, we estimate
there are more than 150 Huckabay Ridge-sized projects, including
more than 1,000 individual tanks, which would result in 81 trillion
BTU's a year, or 81 million MCF of RNG. Our modular
technology would also allow the participation of smaller dairy
farms, where they could be economically grouped via tank, pipes,
or other transport systems to central digester sites.
Pigs are a valuable part of our process as well! Indeed, most of
the systems based on our technology currently operating in Europe
operate on swine farms. The potential swine market in the U.S.
represents, at full utilization, potentially another 65 trillion BTU's
a year of natural gas, or 65 million MCF of RNG.
EPC recently signed a letter of intent with Swift & Company,
the world's second-largest processor of fresh beef and pork
products, where we plan to use our technology to extract methane-
rich biogas from the animal wastes, as well as meat processing
wastes and certain wastewater plant residual streams that would
otherwise be land filled or land applied. We will be cooperating
with Swift to look at potential projects at seven other beef and pork
production facilities throughout North America. We are excited
about the opportunity to help Swift reduce costs and have a
positive impact on the environment.
If you consider full utilization of wastes from the meat packing
industry, which includes both their manure and numerous other by-
products, you could potentially add another 5 trillion BTU's a year
or 5 million MCF of RFG.
EPC's future has a place in the fuels world as well. There is
potential for LNG production as a conventional fuel substitute. But
perhaps one of the most important areas of potential expansion for
EPC, and I know it is an important area for this committee, is that
our EPC digesters are complementary with ethanol production, not
in competition with it. Ethanol is a liquid fuel source, appropriate
for gasoline blending and targeted at the automotive market.
Biogas, on the other hand, is more appropriate for onsite use in
heating, electricity generation and industrial processes, or as a
source of RNG for delivery via conventional natural gas pipelines.
EPC digesters can supply ethanol producers with natural gas
on-site, reducing reliance on imports of conventional natural gas,
imports of LNG, and even the infrastructure needed for natural gas
transport.
Natural gas, which you well know, is subject to wide
fluctuations in price, and these fluctuations create uncertainty in
industrial processes that rely on natural gas. This is no less true for
the production of ethanol, as natural gas is a crucial element in the
ethanol production process, and fluctuations in the price of natural
gas are certainly hampering the implementation of ethanol
production. Natural gas now costs $7 per mmBTU; it takes
approximately 33,000 BTU's of natural gas to manufacture one
gallon of ethanol, costing producers $0.23 for every gallon of
ethanol they make. By providing readily available RNG for
ethanol producers, EPC is offering a crucial ingredient that will
facilitate the expansion of ethanol production.
Ethanol production uses corn as well as natural gas to create
ethanol. The byproducts of this process, distillers grain and liquid
stillage, can be used as source materials to be added to the manure
for the digesters that supply the ethanol plant with RNG.
One of EPC's facilities in Wisconsin is currently co-digesting
cow manure with liquid waste (stillage) from a nearby ethanol
plant.
Further, if I may quote from RFA's own Ethanol Industry
Outlook 2006, "Many estimate the supply of distiller's grains to
reach 12-14 million metric tons by 2012 as the RFS (Renewable
Fuels Standard) is fully implemented. Some believe this level of
output will make it necessary to find new markets and uses for co-
products." We believe that our systems can make productive use
of these co-products to produce gas for the ethanol production
process.
There is going to be a huge demand for a reliable, cost-
effective, on-site source of renewable natural gas if the President's
plan to increase ethanol production to 7.5 billion gallons by 2012
(from 4 billion gallons in 2006) is realized. To obtain an increase
in production of 3.5 billion gallons of ethanol, these plants will
need more natural gas. We estimate this need will essentially
double the industry's demand for natural gas at the same time that
domestic and world demand grows. Producing RNG on-site or
proximate to ethanol plants will help abate their need for purchased
natural gas and could help stabilize their pricing structure for at
least the RNG portion of those energy needs.
EPC digesters use technology that has been proved successful
in digesters throughout Europe and at EPC's first three projects in
the United States. Unlike renewable energy methods that are
exotic, but are yet to be fully tested, EPC has technology that is
ready today. Our digesters already produce RNG from a diverse
supply of farm and food wastes. Our technology is currently
accommodating waste products from ethanol production. We
believe that our evolving modular design for the digesters will
enable rapid deployment at ethanol plants across the country.
There are currently many ethanol plants under construction, and
EPC has identified a market for 800 new digesters at these plants,
bringing the total potential market for digesters to 5,600
nationwide.
Our challenges? The lack of commercial credit and the
limitations on our capital financing capability, mean that the
development of this biogas technology will be significantly slowed
if the public portion of the public/private partnership, such as Title
XVII of the Energy Policy Act of 2005 (EPACT), is unavailable to
"bridge the gap." Further, our production of RNG is not included
in the numerous incentive programs available to all other
alternative energy producers.
I quote from EPACT, "New or significantly improved
technologies" including "renewable energy systems" and "efficient
end-use energy technologies" that "Avoid, reduce, or sequester air
pollutants or anthropogenic emissions of greenhouse gases."
We are also looking at some of the existing Agriculture
programs to expedite our work. . I must tell you, Mr. Chairman,
this Committee structured the loan guarantee program in Title
XVII very well. Unfortunately, when we last heard, the guidelines
were still at OMB. Moreover, DOE has told us that RNG from
manure and food wastes (biogas) is not currently a high priority.
Partial early guarantees, such as those this Committee did in
Title XVII of EPACT, could help us "bridge the financing gap" for
proving commercial viability! With some help with the "D" in
"R&D" to more rapidly expand this efficient technology," we
could move even more quickly through the first integration of our
multi digester systems, which can be used for on-site, dependable
systems for agricultural and ethanol operations, for sale of
renewable gas into the existing pipeline system, and for future
expansion to LNG applications.
We at EPC are advancing with the support of accommodative
equity markets, by picking the low-hanging fruit. Our RNG
initiatives could move forward more quickly with a private-public
partnership and with participation at simple parity in incentive
programs already available to all other renewable producers. RNG
development would benefit from a level playing field and from
implantation of Title XVII. It could enable us to extend the market
place to smaller farms and more distant waste locations that may
be more costly for us to serve at this time.
Environmental Power's path to commercial viability is the
expanded large scale production capabilities of the technology.
The construction and operation of initial projects to drive costs out
of system will also provide those modularized templates for future
projects. Commercial success of initial projects will demonstrate
the wide range of applications; e.g. electricity, pipeline gas, inside
the fence, ethanol production, LNG, and other thermal energy
applications.
We are very excited about our role of providing our customers
with dependable, predictable natural gas supplies, of helping
establish more independence from imported natural gas supplies,
of a growing potential synergy with ethanol production, and of
providing sensible, affordable, environmental solutions. Our
trademark: we are making Energy That Is Beyond RenewableT,
and moving forward to generating renewable natural gas.
I thank the Committee for their time and attention, and I would
welcome you to visit our facilities around the country, particularly
in Texas, where this fall we plan to start delivering RNG to the
pipeline.
I would be pleased to take your questions.
MR. HALL. Without objection that will be done, and for
questions that we may have of the group, and because others who
are in other committees, we will leave the record open for
additional questions from members of the committee. And if you
could, try to get those back to us in maybe 10 days or 2 weeks.
Thank you. Go ahead now, Mr. Cresci. You have completed?
MR. CRESCI. I have completed. Thank you very much for the
opportunity to present.
MR. HALL. Okay. Mr. Novak, you gave us a lot of good facts,
figures, stories, techniques, and things like that. I think you heard
Mr. Yoder. Were you here this morning when Mr. Yoder testified
about the fact that their city, a little city, I don't know how big the
city is in Alaska, is going to discuss plans to install a small nuclear
unit for electricity generation to replace diesel generators. In your
comparative cost, your estimate for nuclear remains the same even
though many in the industry expect that their plants are going to be
less expensive--the newer plants getting less expensive. What are
the facts on that and why is that?
MR. NOVAK. Thank you, Mr. Chairman.
MR. HALL. And where do they get that?
MR. NOVAK. I don't know if this mic--yes, it does work. We
were a little bit conservative on the improvements or the reductions
in cost between 2010 and 2020, and there may be additional cost
reductions for nuclear out in the future, but we assume that you are
going to see a lot of standardization in the first-of-the-kind plants
built due to the MP2020 program that is currently underway in
DOE. Those plants will contain a lot of the standard designs, and
you will get cost savings there. So we may not see additional cost
savings in the 10-year period following.
MR. HALL. Can you describe what you would call some
promising energy storage technologies for use with the renewable
sources? You want to enlarge on that?
MR. NOVAK. Yes. Some battery systems show some promise,
and I have got a few listed here that I could provide for the record;
a nickel metal high drive, redox globe battery systems, and some
emerging lithium ion technology. But also, there are existing
energy storage technologies such as compressed air and pump
storage that still make a lot more sense economically than some of
the battery technologies. But again, those have their own
challenges with where you would put pump storage in and those
are some of the environmental considerations. I would be happy to
provide more information.
MR. HALL. Okay, if you would. And Mr. Cresci, I think you
are aware of an ongoing debate in Texas and Oklahoma where
Superfund laws, namely CERCLA and EPGRA, are being applied
to animal feeding operations and with litigation that is filed by the
city of Waco against some surrounding ranches there and litigation
in Oklahoma. What impact could this have on your industry and
how would you be affected?
MR. CRESCI. Well, the Waco litigation, I believe, has been
settled and in fact, does involve a number of the farms that are in
the Erath County area, which is where the Huckabay Ridge project
is located. To answer your question directly, if you were to treat
hazardous waste treatment or handling as the handling of a
hazardous waste, it would probably mean that all people in the
process, at least as I understand the way the Superfund legislation
was originally set up, would probably have to treat it in that
manner, and I would think that it would drive the cost of handling
waste to make any type of energy extraction from that material to
be uneconomic.
I don't know of any inherently hazardous materials in animal
waste and basically, we see waste, animal waste in particular, in
this case as a resource, and extracting the value from it and having
an economic value attached to it sufficient to allow it to be
processed and handled properly, including if, in some instances,
perhaps, removal from areas; in other instances, digested into
compost which can be sold or moved into market places requiring
fertilizers and other materials for growing in other areas. It seems
to me that that more than adequately deals with the issues as I
understand them in terms of over-nutrification.
MR. HALL. I know we have had an opportunity to discuss with
you, your dairy cows around the county. What are the ways you
can handle it? A constituent in my district, in particular, a guy
named Bo Kilgren, was very interested in chicken waste. Would
you enlarge on that?
MR. CRESCI. I will, indeed. Unfortunately, we can't handle
chicken waste. It does not really process efficiently through
anaerobic digestion. There are, I understand, some other
technologies that are being talked about for chicken waste, but it
certainly is a problem. We would like to have an answer to it
because it seems to be a large problem. The waste that we can
handle mostly are cattle waste; dairy cattle is, obviously, a very
good source, but also feed cattle and also swine. Those are the
ones that are most efficient for us to process.
MR. HALL. Okay. My time is up, but Mr. Boucher, when you
are ready, if you have any questions.
MR. BOUCHER. Mr. Chairman, thank you very much. Mr.
Novak, let me begin with you. You are making a prediction, if I
read these numbers correctly, that by the year 2010 the cost of
IGCC will be $47 per megawatt hour. The natural gas combined
cycle cost will be $56 per megawatt hours, so IGCC will be
cheaper at that point by a substantial margin than the natural gas
combined cycle. My questions are this. What are the comparisons
today between those prices and what assumptions are you making
about the deployment of IGCC that gets to the cost of $47 per
megawatt hour from whatever the number is today?
MR. NOVAK. Mr. Chairman, the numbers that I presented
come from an analysis that we did for our summer seminar this
past August, where we bring chief executives in and the topic was
"Making Billion Dollar Decisions on New Generation Technology
in a Carbon Constrained Future." So what we did was we looked
at today's technology and tried to come up with estimates of the
cost of electricity of today's technology that were it to be deployed
would be on line in a 2010 time period. So those numbers on a
cost of electricity basis are really today's technology. Pulverized
coal is the lowest cost of electricity basis.
MR. BOUCHER. No, I understand. It is today's technology. I
am not quarreling with that, but I mean, I am told that the more
IGCC units that get deployed for electricity generation purposes,
the lower the cost of the units becomes and so as you deploy more
of these, you achieve a lower cost per megawatt hour than the
current cost, so my questions to you are what today are the cost
comparisons, if you know, between the natural gas combined
cycle; it is going to be $56 in 2010, what is it today? And the
IGCC, which will be $47 in 2010; what is that today? Do you
know the answer to that?
MR. NOVAK. I do not.
MR. BOUCHER. Okay. Well, let me just go to the second part
of it. In making your prediction that IGCC is going to get to $47,
which is an attractive number. I mean, if it gets to that and it is
cheaper than natural gas combined cycle, we can presume it is
going to be widely used. How many units of IGCC have to be
deployed between now and 2010 to get to this $47 number? What
is your assumption?
MR. NOVAK. We think that $47 is the current number. If you
build a 600 megawatt plant and have it on line in the 2010-2012
time period, over the lifetime of that plant it is $47 per megawatt
hour, about 20 percent more than PC.
MR. BOUCHER. Dr. Katzer, you are expert in this. Do you
agree with that?
MR. KATZER. Generally, yes. The difference between my
numbers and the EPRI numbers are somewhat in the assumptions
that we made in calculating the cost of electricity. I think we are
using a little higher coal cost. I think you used $1 a million; we
used $1.50, which is a little higher than it is on average today. I
think those are the differences between our numbers, but our
deltas, I think, are consistent. So basically, we don't have any
differences. We try to look at what we call the Nth plant, where N
is a small number, not well defined, but a small number: 5, 6. That
gets you out in the range where you have gotten over making
mistakes, and you ought to be able to do things, design and
construction-wise efficiently.
MR. BOUCHER. Let me ask you this, Dr. Katzer. We included
some incentives, tax credits in EPAct 2005 to encourage clean coal
technology used by electric utilities. We had IGCC primarily in
mind at the time that we applied those credits. I am told by electric
utilities that they do make a difference in their planning and that
many are looking very favorably now at IGCC based upon the
availability of tax credits to help bring down the cost of
deployment. In the process of preparing that legislation, we had
some analysis that suggested, as you have in your testimony, that
pulverized coal is more economic today than IGCC, but that that
equation could change and that the more IGCC units were
deployed, the more that technology is placed in the commercial
market and refined and the more units that are produced, and just
because of volume of production, the cost comes down.
The time would be reached after about 12 full scale units to
find the 600 megawatts, at least, per unit. When you deploy 12 of
these, the cost differential vanishes and you wind up with,
essentially, an equal cost of IGCC and pulverized coal. Now, this
is IGCC without the carbon capture component, which obviously
adds another element of cost. Would you agree that that is
essentially right and can you also make some kind of prediction
about the point at which that number of units, whether it is 12 or
some other number, that equalizes the cost of IGCC and pulverized
coal is reached?
MR. KATZER. I would agree that directionally, that is how
things happen. To be able to quantitatively predict how things
would work out for Unit 6 out to Unit 12 or for Unit 2 to Unit 6 is
really difficult. Directionally, that is the correct direction. The
other piece of the equation, which is what I tried to address a little
bit here, is increasing cost of emissions control on PC units. As
these permit levels keep going down, the cost keeps coming up and
that is narrowing the gap between IGCC and PC, so if you look out
in the future a decade or so, which means you have built several
plants and you have got a few more in the construction stage, you
begin to see a point where they look like they are coming to parity
in terms of cost of electricity generating, yes.
MR. BOUCHER. So the basic conclusion is that at some point a
decade or so down the road, you do achieve parity in cost between
the two?
MR. KATZER. I think that is quite likely, yes.
MR. BOUCHER. Okay. Let me ask this question. The EPA, as
you know, has promulgated a new mercury regulation and it is a
bit of a challenge for some electric utilities to comply with that; an
element of cost is involved. Did you factor the cost of retrofitting
pulverized coal with that or the cost of, if they are planning to use
new pulverized coal, adding the mercury reduction technology into
your calculations, because IGCC eliminates mercury, essentially. I
think you said 99 plus percent.
MR. KATZER. Yes.
MR. BOUCHER. And so have you calculated that into your
assumption that pulverized coal is a cheaper alternative than
IGCC?
MR. KATZER. In the base unit cost, which is 4.8, you only
capture the mercury that is captured in the process of flue gas
desulphurization in a particular removal. Then we have looked
down the road to increase the reduction of criteria pollutants and
have added mercury removal in, and that was part of the .2 cents
per kilowatt hour additional cost that I noted, so that is where we
put it in. We did not factor it in as explicit technology application
today because for about 10 years there will not be a requirement to
explicitly remove additional mercury.
MR. BOUCHER. Okay. All right, Mr. Chairman, I appreciate
your indulgence with this. Thank you very much.
MR. HALL. I thank you. I want to go back and ask Dr. Katzer
about the coal. By the way, do you know John McCatta, that is an
authority writer?
MR. KATZER. Yes, yes. Off-hand, at least.
MR. HALL. Okay.
MR. KATZER. I met him probably once.
MR. HALL. I heard him make a statement about 12 years ago at
a speech in Dallas that there was enough coal in the mid-section of
this country, if we could mine it, that would total the output of all
OPEC nations combined. Could that be anywhere close to being
an accurate statement?
MR. KATZER. Yes. There are a lot of assumptions in terms of
exactly how you are talking about it, but the answer is in large
measure, we are the Middle East of coal versus they, the Middle
East of oil. It is a tremendous resource base we have, we are
sitting on.
MR. HALL. On the technologies that you have capably laid out
and described, are there any existing Federal or State rules that are
hindering the deployment of the technologies that you set forth?
And if so, it may be a hard question to answer right now, but could
you give me some information in writing on that if it takes some
research?
MR. KATZER. Mr. Chairman, I think I would need to do a little
research on that. That piece of the equation is not one in which I
have a lot of involvement.
MR. HALL. I thank you. And Dr. Murphy had questions that
he wanted to ask, too, Dr. Hammond. Could you clarify the
economic impact you believe cost competitive solar technology
would have, and what the Government is doing to achieve this
objective?
MR. HAMMOND. Yes, the economic impact of cost-competitive
solar, if you look at the President's objective of having cost-
competitive solar in 2015 and look at a reasonable build out of that
solar technology, first of all, you might take a simple analysis and
just look at the economic value of that solar energy at the total
kilowatt hours that might be produced and multiply that by an
average value for electricity. You would estimate an economic
value of a few billion dollars for that electricity at that time, that
that simplistic analysis ignores some critical aspects of solar
technology that must be looked at and make solar a really
attractive technology.
If you imagine the hot summer afternoons when you are
clicking your air conditioning on full and likewise, our natural gas
peaking plants are clicking on full, that is exactly coincident with
the time when you get the maximum resource from deployed solar
technology. And so the coincidence of that with the peak end load
has tremendous additional benefit. It can relieve strain on the
transmission and distribution infrastructure at precisely the time
that it is maxed out. It would save valuable natural gas resources
that are being deployed at that time. So the economic impact,
while much more complicated to calculate, is multiples of just the
value of the electric energy itself. And that doesn't even account
for the fact that it is a zero emission, which brings substantial
additional economic benefit.
What the Government is doing to achieve and capture these
economic benefits, the most significant recent initiative, of course,
is the Solar America Initiative. Under that guise through the
Department of Energy, an additional $65 million has been
allocated for Fiscal Year 2007 directly for solar technologies and
that is an important program that we strongly encourage Congress
to fully fund, but also to make sure that it gets deployed in a way
that new revolutionary solar technologies have a chance to benefit
from that, because it is those technologies that are going to really
enable that cost competitive deployment.
At the State level, there are also additional important activities
going on, including in our State of Pennsylvania, where the
Governor and the Secretary of the Department of Environmental
Protection have specifically allocated funds for new solar
technology development to support Pennsylvania's aggressive
solar renewable portfolio standard. So those are a glimpse at some
of the activities that are going on from the Government's
perspective to support it. Our key message would be that the
opportunity is so significant; there is a significant opportunity for
Congress to expand and accelerate that support to make sure that
the United States plays a leadership role in deployment of solar
technology.
MR. HALL. All right. I thank you for that. I have other
questions I would like to ask of Mr. Linebarger. I am going to ask
you and they are going to be in the record, and I will ask you to
give us a written explanation. What do you think is the greatest
significant opportunity for DG in the United States? You might
answer that. I think you can do that in one sentence, can't you?
MR. LINEBARGER. I sure can, yes. The biggest significant
opportunity, I think, is deploying, particularly, the energy efficient
technologies related to combined heat and power and then
protecting critical infrastructure would be the two things, I think.
MR. HALL. And he says the committee spends a lot of time
thinking about energy security. Can you tell me what you mean
when you say DE has a role in energy security?
MR. LINEBARGER. My idea there would be twofold; first, that
we can use a wide range of renewable fuels, which would reduce
our dependence on oil; and second, by ensuring that we have
critical infrastructure ready, we protect ourselves against failures in
the grid.
MR. HALL. All right, we have other questions. How can DE
impact the price of electricity on the grid? I will ask you to answer
that for the record. Do you have further questions?
MR. BOUCHER. No.
MR. HALL. And the reason we are asking to leave this open,
where we can ask you, is the lack of availability of other members
of the subcommittee that have questions they want asked. Those
that are still here representing them have made notes of those, so
we will be back in touch with you and I sure do thank you. You
have been a good, patient panel. You have allowed us to leave to
run over to the Capitol and vote. I think we voted three or four
times over there. We have a committee meeting that is beginning
at 1:30 that is a markup, so we have to go from here to that, but
you have your job and you are a very busy man and you have been
generous with your time, preparing yourself to even be solicited to
give us information. We take what you say, the information you
give us. We don't have to seek it from you and we write the
legislation from it, or correct the legislation from it, so you are
doing a real service to your country. I know Chairman Barton
appreciates it, and the staff does, and we thank you very much and
you are dismissed.
[Whereupon, at 1:37 p.m., the subcommittee was adjourned.]